ITAT Delhi Judgments — June 2020

The Tribunal held that once an asset becomes part of a block of assets, its individual identity is lost for depreciation purposes. The user test is only relevant when the asset first enters the block. Therefore, depreciation cannot be denied in subsequent years if it was allowed previously.

The Tribunal held that for concluded assessments, additions must be based on incriminating material found during the search. It also held that assessments made under Section 143(3) after the satisfaction note for Section 153C proceedings were invalid. Therefore, the additions for AY 2005-06 were deleted, and the assessments for AY 2009-10 and 2008-09 were quashed.

The Tribunal held that a completed assessment can only be reopened under section 153A if incriminating material is found during the search. Since no such material was found, the additions made by the Assessing Officer were not sustainable.

The Tribunal held that for concluded assessments, additions must be based on incriminating material found during the search. It also held that assessments made under Section 143(3) after the satisfaction note for Section 153C proceedings were invalid. Therefore, the additions for AY 2005-06 were deleted, and the assessments for AY 2009-10 and 2008-09 were quashed.

The CIT(A) held that the assessment for AY 2009-2010 was time-barred as it fell outside the six-year period prior to the date of receiving the seized material. The Tribunal upheld this decision, agreeing that the AO lacked jurisdiction.

The Tribunal held that the disallowance on account of sundry creditors was unjustified as the purchases were accepted and payments were made in subsequent years. The Tribunal also upheld the deletion of the disallowance on salary paid to directors, stating the AO failed to provide comparable cases to prove excessiveness.

The Tribunal held that for concluded assessments, additions must be based on incriminating material found during the search. It also held that assessments made under Section 143(3) after the satisfaction note for Section 153C proceedings were invalid. Therefore, the additions for AY 2005-06 were deleted, and the assessments for AY 2009-10 and 2008-09 were quashed.

The Tribunal held that the AO erred in substituting the project cost from a later year and that the revenue recognition policy of the assessee, based on 30% completion, was consistently followed and accepted in subsequent assessment years. The addition made by the AO was not justified.

The Tribunal held that the penalty under Section 271(1)(c) is not sustainable because the show-cause notice issued to the assessee was vague and did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars. Following judicial precedents, the Tribunal set aside the penalty.

The Tribunal held that the investment in shares of subsidiary companies was in furtherance of the assessee's main business objects. Therefore, the interest paid on borrowed capital for such investments was an allowable business expense.

The Tribunal held that for assessment under section 153A, incriminating material must be unearthed during the search. Since no such material was found for the assessment year in question, the addition made by the Assessing Officer was not justified.

The Tribunal held that the disallowance on account of sundry creditors was unjustified as the purchases were accepted and payments were made in subsequent years. The Tribunal also upheld the deletion of the disallowance on salary paid to directors, stating the AO failed to provide comparable cases to prove excessiveness.

The Tribunal held that for concluded assessments, additions must be based on incriminating material found during the search. It also held that assessments made under Section 143(3) after the satisfaction note for Section 153C proceedings were invalid. Therefore, the additions for AY 2005-06 were deleted, and the assessments for AY 2009-10 and 2008-09 were quashed.

The Tribunal dismissed the Revenue's appeal, upholding the assessee's eligibility for exemption under Sections 11 & 12 based on previous rulings. The assessee's appeal regarding the Rs. 1.30 crore donation was allowed with a direction to the Assessing Officer to verify if it was a corpus donation.

The Tribunal held that the addition made by the AO was not sustainable as the details furnished by the assessee were not controverted with cogent material and investigation. The AO failed to conduct proper investigation on the information provided by the assessee.

The Tribunal dismissed the Revenue's appeal, upholding the assessee's eligibility for exemption under Sections 11 & 12 based on previous rulings. The assessee's appeal regarding the Rs. 1.30 crore donation was allowed with a direction to the Assessing Officer to verify if it was a corpus donation.

The Tribunal held that the AO failed to conduct a proper inquiry into the claim of deduction under Section 54F, the source of investment, and the taxability of rental income and wealth tax. Therefore, the PCIT's order under Section 263 was justified.

The Tribunal allowed the appeal, directing the deletion of the transfer pricing adjustment for software development services. It also held that no adjustment is to be made on account of notional interest on receivables, following its own previous decisions and High Court rulings.

The Tribunal held that RPM is the most appropriate method for benchmarking transactions where goods are purchased from an AE and resold without value addition. The Tribunal noted that RPM was accepted in prior and subsequent years and no distinguishing facts were presented by the Revenue.

The Tribunal accepted the assessee's request for withdrawal of the appeal. The appeal was dismissed as withdrawn.

The Tribunal held that while the charitable nature of the objects was not disputed, the genuineness of the activities needed to be examined with supporting evidence. The matter was restored to the CIT(E) for fresh consideration.

The Tribunal held that revenue from software supply is not taxable as royalty, following previous High Court decisions. However, the issue of a 'dependent agent permanent establishment' was set aside and restored to the Assessing Officer for fresh consideration.

The Tribunal held that interest earned by a cooperative society from its members, including interest on savings accounts, is business income eligible for exemption under Section 80P(2)(a)(i). The CIT(A) was incorrect in treating it as income from other sources.

The Tribunal upheld the CIT(A)'s disallowance of 10% of dividend income as reasonable. It also directed deletion of the addition for advances written off, considering it as a business loss. Issues related to Section 10A deduction were dismissed based on previous rulings.

The Tribunal held that revenue from software supply is not taxable as royalty, following previous High Court decisions. However, the issue of a 'dependent agent permanent establishment' was set aside and restored to the Assessing Officer for fresh consideration.

The Tribunal upheld the CIT(A)'s disallowance of 10% of dividend income as reasonable. It also directed deletion of the addition for advances written off, considering it as a business loss. Issues related to Section 10A deduction were dismissed based on previous rulings.

The Tribunal upheld the CIT(A)'s disallowance of 10% of dividend income as reasonable. It also directed deletion of the addition for advances written off, considering it as a business loss. Issues related to Section 10A deduction were dismissed based on previous rulings.

The Tribunal held that while the charitable nature of the objects was not disputed, the genuineness of the activities needed to be examined with supporting evidence. The matter was restored to the CIT(E) for fresh consideration.

The Tribunal upheld the CIT(A)'s disallowance of 10% of dividend income as reasonable. It also directed deletion of the addition for advances written off, considering it as a business loss. Issues related to Section 10A deduction were dismissed based on previous rulings.

The Tribunal upheld the CIT(A)'s disallowance of 10% of dividend income as reasonable. It also directed deletion of the addition for advances written off, considering it as a business loss. Issues related to Section 10A deduction were dismissed based on previous rulings.

The Tribunal held that the penalty notice issued under Section 271(1)(c) was bad in law as it did not specify which limb of the section (concealment of income or furnishing inaccurate particulars) the proceedings were initiated under. The Tribunal relied on Supreme Court and High Court decisions to support this.

The Tribunal held that transactions in the nature of current account, especially when the lending company's business includes money lending as a main objective and the transactions are in the ordinary course of business, are not covered under Section 2(22)(e) of the IT Act. Therefore, the addition made by the AO was deleted.

The Tribunal held that since the quantum addition order was set aside by the ITAT, no penalty could be levied at that stage. The penalty orders were set aside, and the AO was at liberty to initiate penalty proceedings after passing a fresh assessment order.

The Tribunal held that the addition made by the revenue was liable to be set aside due to a violation of the principles of natural justice, as the assessee was not afforded an opportunity to be heard before the addition was made. The issue of expense apportionment was kept open.

The Tribunal held that since the agents had their offices abroad and services were rendered outside India, the assessee was not required to deduct tax at source. Therefore, the disallowance was not justified.

The Tribunal upheld the reopening of the assessment, finding it based on tangible material. On merits, the addition was confirmed as the assessee failed to discharge the onus under Section 68 to prove the genuineness of the share capital transaction.

The Tribunal held that the addition made by the revenue was liable to be set aside due to a violation of the principles of natural justice, as the assessee was not afforded an opportunity to be heard before the addition was made. The issue of expense apportionment was kept open.

The Tribunal held that if an assessee has not maintained books of accounts, the requirement to get them audited does not arise, and thus penalty under Section 271B is not leviable. The penalty for non-maintenance of books under Section 271A is sufficient.

The Tribunal held that the management fee paid to the associated enterprise was a genuine business expense. It also ruled that the advertisement and publicity expenses incurred by the assessee were wholly and exclusively for its business and should be allowed in full.

The Tribunal restored the issue to the AO to verify if the payee included the reimbursed amount in its income and paid taxes. The Tribunal also noted that Section 194I would only apply to office rent and not other reimbursed expenses.

The Tribunal held that the assessee is the owner and sole beneficiary of the 'MakeMyTrip' brand, as evidenced by the trademark registration. It further found that AMP expenses were incurred wholly and exclusively for the assessee's business and were not capital in nature, and that benefits from IPO listing did not accrue to the parent company.

The Tribunal held that the reassessment proceedings were invalid because the reasons recorded by the Assessing Officer and those communicated to the assessee were inconsistent. This deviation from the prescribed procedure, as per Supreme Court directions, rendered the reopening and subsequent assessment orders null and void.

The Tribunal held that the reassessment proceedings were invalid because the reasons recorded by the Assessing Officer and those communicated to the assessee were inconsistent. This deviation from the prescribed procedure, as per Supreme Court directions, rendered the reopening and subsequent assessment orders null and void.

The Tribunal held that the reassessment proceedings were invalid because the reasons recorded by the Assessing Officer and those communicated to the assessee were inconsistent. This deviation from the prescribed procedure, as per Supreme Court directions, rendered the reopening and subsequent assessment orders null and void.

The Tribunal dismissed the Revenue's grounds related to transfer pricing as withdrawn due to an Advance Pricing Agreement. Grounds concerning Section 14A disallowance were upheld in favor of the assessee, following jurisdictional High Court judgments. The disallowance for non-deduction of TDS was also dismissed, relying on a previous ITAT ruling that the foreign company did not have a Permanent Establishment in India.

The Tribunal held that the assessee had set up and commenced its business during the relevant year, considering its substantial activities like raising loans, investing in land as stock-in-trade, and advancing funds for land acquisition. Consequently, interest expenses and other related expenditures were allowed as business expenditure.

The Tribunal held that the interest earned by the assessee from banks is not covered by the principle of mutuality and is exigible to Income Tax. It reasoned that while the surplus itself might be exempt under mutuality, interest on bank deposits does not fall within this ambit, citing the definitive law laid down by the Apex Court. Therefore, the addition of Rs. 18,09,368/- (bank interest) was upheld, dismissing ground no. 5(i). Regarding rental receipts and advertisement receipts (part of Rs. 35,11,665/-), the Tribunal set aside the CIT(A)'s order and directed the AO to delete the additions. This was based on the principle of consistency, noting that these receipts were accepted as non-taxable in earlier years by the department and the Tribunal, and there was no change in law or facts. For contractual receipts (Rs. 28,42,085/-), specifically maintenance charges received from members (Rs. 24,86,675/-), the Tribunal directed deletion, stating they are not taxable on the principle of mutuality and avoiding double taxation. The remaining Rs. 3,55,410/- (part of advertisement receipt) was also directed to be deleted for similar reasons. Grounds related to capital gains and compensation receipts were addressed by the adjudication on grounds 2 and 7, which were linked to other grounds. Ground 8 was consequential, and ground 9 was general. The Tribunal did not expressly leave any issue undecided.

The Tribunal held that the assessee is the owner and sole beneficiary of the 'MakeMyTrip' brand, as evidenced by trademark registration. It further found that AMP expenses were incurred wholly and exclusively for the assessee's business and were not capital in nature, thus deleting the addition on account of AMP expenses.

The Tribunal held that the Arm's Length Price (ALP) for medical equipment cannot be determined at nil and restored the issue to the AO/TPO for further substantiation by the assessee. Regarding interest on outstanding receivables, the Tribunal held that no adjustment is warranted as it is subsumed in working capital adjustments and considering the collection period.

The Tribunal decided to remand the issues concerning the Section 80IA deduction and depreciation on wind electricity generators back to the Assessing Officer for fresh adjudication, following previous Tribunal orders. However, it upheld the disallowance of depreciation on land, stating it is settled law that depreciation on land is not allowable.