ITAT Delhi Judgments — August 2022

The Tribunal allowed the appeal regarding business expenses incurred outside India, stating they were directly attributable to Indian business and not subject to Section 44C. The matter of Early Retirement Scheme expenses was remanded to the AO for fresh examination. The claim for bad debts was allowed, with a specific deduction of Rs. 1,88,87,531/-.

The Tribunal held that the expression 'a residential house' under Section 54 can include multiple contiguous units constructed on adjacent plots, provided they are used as a single residential unit. The amendment to Section 54 by the Finance Act, 2014, which restricted the deduction to 'one residential house', was prospective and not applicable to the assessment year in question.

The Tribunal restored the issue of whether software supplied was standard or customized to the AO for verification. If found to be standard, the AO was directed to reconsider the issue in light of the Supreme Court decision in Engineering Analysis Centre of Excellence P. Ltd. The Tribunal refrained from adjudicating the alternate plea of pure reimbursement.

The Tribunal held that employee's contribution to ESI and PF, if paid before the due date of filing the Income Tax Return under Section 139(1), is an allowable deduction. Therefore, no disallowance can be made for such belated payments.