ITAT Delhi Judgments — January 2023

The Tribunal upheld the disallowance of expenses related to premature FDR encashment and interest on a loan. It found that the assessee failed to provide evidence connecting these expenses to the earning of interest income.

The tribunal held that income tax includes surcharge and education cess. Therefore, the MAT credit under section 115JAA should be allowed to be set off against the tax on total income after considering surcharge and education cess.

The Tribunal found that the revenue authorities dismissed the assessee's plea solely on the grounds that a revised return was not filed. To serve the interest of justice, the issue was remitted back to the AO for a fresh decision on the assessee's revised claim.

The Tribunal held that the payments received by the assessee were in the nature of royalty for the use of a process or imparting of information, falling under Explanation 2 to Section 9(1)(vi) of the Income Tax Act. Consequently, the income was taxable on a gross basis at 10% as per Section 115A, and the assessee did not have a PE in India.

The Tribunal held that the services rendered by overseas employees from Hong Kong were not effectively connected to the Indian Project Office. Therefore, the addition made under Section 44DA was deleted.

The Tribunal held that no real income had accrued to the assessee as the benefit was conditional, subject to a lock-in period, and the entries in the company's books were reversed subsequently. Therefore, Section 28(iv) was inapplicable.

The Tribunal held that no disallowance under Section 14A is called for in the absence of exempt income. It also affirmed the deletion of addition on account of deemed dividend, as it was covered by the assessee's own case for a prior year. Regarding the sale of silver, the Tribunal found that the cash sales as per the seized material were duly reflected in the bank account, thus upholding the deletion of the addition.

The CIT(A) restricted the disallowance to the extent of exempt income earned, following the jurisdictional High Court's decision. The Tribunal found no substance in the Revenue's appeal against this restriction.

The Tribunal held that since no incriminating material was found during the search and the assessment was unabated, the addition under Section 153A was not sustainable. Consequently, the Revenue's appeal on merits was rendered infructuous.

The Tribunal held that the CIT(A) should have decided the appeal on its merits after providing a proper opportunity of hearing. The case was restored to the CIT(A) for fresh adjudication.

The ITAT held that the CIT(A) should have decided the appeal on merits after giving the assessee a reasonable opportunity to be heard. The Tribunal restored the appeal to the CIT(A) for a fresh decision.

The Tribunal held that the payments received by the assessee were in the nature of royalty for the use of a process or imparting of information, falling under Explanation 2 to Section 9(1)(vi) of the Income Tax Act. Consequently, the income was taxable on a gross basis at 10% as per Section 115A, and the assessee did not have a PE in India.

The Tribunal held that the assessee's claim of business expediency and payments to artisans under Rule 6DD(f) were not sufficiently supported by evidence. However, following a Supreme Court judgment, the Tribunal directed the deletion of the disallowance based on business expediency, as the revenue had not rebutted the assessee's averments.

The Tribunal noted that the assessee opted for the Vivad Se Vishwas Scheme and set aside the penalty order. The issue was restored to the Assessing Officer to verify the scheme's settlement and delete the penalty if Form 5 was issued.

The Tribunal held that repayment of a loan taken for charitable purposes would amount to an application of income only if the loan was initially treated as a receipt (income) by the charitable trust. Without this initial recognition as income, repayment would lead to double deduction.