ITAT Delhi Judgments — July 2024

The Tribunal remanded the matter back to the Assessing Officer to re-examine the issues on merits and pass a de-novo order. The AO was also granted the liberty to initiate penalty proceedings under the Income Tax Act for the assessee's non-compliance with notices.

The Tribunal held that the CIT(A) erred in passing an ex parte order without providing adequate opportunity of hearing, especially considering the passing of the assessee's legal consultant. To ensure natural justice, the Tribunal set aside the CIT(A)'s order and remanded the matter back to the CIT(A) for fresh adjudication on merits after affording proper opportunity of being heard to the assessee.

The Tribunal held that the assessee's method of accounting for membership fees, which was accepted by the Revenue in subsequent years, was valid. It also ruled that no disallowance under Section 14A is warranted in the absence of exempt income. Ad-hoc disallowances without rationale were also deemed impermissible.

The Tribunal held that the issue of ESI/PF payment is squarely covered by the Supreme Court's judgment in `Checkmate Services Pvt. Ltd. vs. CIT-I`. The Supreme Court ruled that employers must deposit employee contributions towards EPF/ESI on or before the due date for deduction to be allowed, and such amounts, deemed income under Section 2(24)(x), cannot be deducted if paid beyond the due date. Consequently, the Tribunal upheld the disallowance.

The Tribunal held that the disallowance of salary paid to expatriate employees was not justified, as the employees were on the payroll of the assessee, worked under its sole control, and their functions were solely towards the assessee's business. The Tribunal also noted that prior year's orders had deleted similar additions based on the non-existence of a permanent establishment.

The Tribunal held that the assessee's method of accounting for membership fees, which was accepted by the Revenue in subsequent years, was valid. It also ruled that no disallowance under Section 14A is warranted in the absence of exempt income. Ad-hoc disallowances without rationale were also deemed impermissible.

The Tribunal held that the TPO erred in imputing interest on outstanding receivables, directing its deletion. However, the grounds related to the adjustment for back-end services were not fully adjudicated in this excerpt.

The Tribunal held that sales tax subsidies and Cenvat/Excise refunds are capital receipts and excludible from book profit computation. It also allowed a portion of foreign travel expenses and corrected an understatement of long-term capital gain.

The Tribunal held that sales tax subsidies and Cenvat/Excise refunds are capital receipts and excludible from book profit computation. It also allowed a portion of foreign travel expenses and corrected an understatement of long-term capital gain.

The Tribunal held that the Assessing Officer's failure to issue a draft assessment order before passing the final assessment order, as required by Section 144C(1) for eligible assessees, rendered the assessment order null and void. Consequently, the Revenue's appeals were dismissed, and the assessee's cross-objections were allowed.

The Tribunal held that sales tax subsidies and Cenvat/Excise refunds are capital receipts and excludible from book profit computation. It also allowed a portion of foreign travel expenses and corrected an understatement of long-term capital gain.

The Tribunal held that sales tax subsidies and Cenvat/Excise refunds are capital receipts and excludible from book profit computation. It also allowed a portion of foreign travel expenses and corrected an understatement of long-term capital gain.

The Tribunal held that sales tax subsidies and Cenvat/Excise refunds are capital receipts and excludible from book profit computation. It also allowed a portion of foreign travel expenses and corrected an understatement of long-term capital gain.

The Tribunal found that the CIT(A)'s reliance on a Civil Court order regarding the land transaction was unsubstantiated as it quoted the assessee's submissions, not the court order itself. Therefore, the issue of Rs. 4.32 Cr. requires proper examination and verification by the AO. For the Rs. 33.76 Lacs addition, the CIT(A) considered them financial creditors without providing reasons, so this issue also needs re-examination by the AO. Both grounds of appeal by the Revenue were statistically allowed, and the issues were restored to the file of the AO for fresh verification and examination.

The Tribunal found that the assessee had consistently raised objections regarding the jurisdiction of the assessment proceedings under section 153C, which were only disposed of on 17.11.2022. Given that a notice under section 142(1) for which the penalty was levied was issued during or immediately after these jurisdictional challenges, the assessee had valid reasons for not responding on merits. Consequently, the Tribunal concluded that the imposition of penalty under section 271(1)(b) was unjustified.

The Tribunal held that sales tax subsidies and Cenvat/Excise refunds are capital receipts and excludible from book profit computation. It also allowed a portion of foreign travel expenses and corrected an understatement of long-term capital gain.

The Tribunal affirmed the CIT(A)'s decision, holding that the Assessing Officer exceeded jurisdiction in re-characterizing the transaction from 'sale of shares' to 'sale of assets' during proceedings under Section 201. Since the assessee had already deducted and deposited TDS at the applicable rate on the share transfer, it could not be deemed an 'assessee in default'. The impugned order of the CIT(A) was upheld.

The Tribunal held that the Assessing Officer's failure to issue a draft assessment order before passing the final assessment order, as required by Section 144C(1) for eligible assessees, rendered the assessment order null and void. Consequently, the Revenue's appeals were dismissed, and the assessee's cross-objections were allowed.

The Tribunal held that sales tax subsidies and Cenvat/Excise refunds are capital receipts and excludible from book profit computation. It also allowed a portion of foreign travel expenses and corrected an understatement of long-term capital gain.

The Tribunal held that TDS credit should be allowed in the same assessment year in which the corresponding income is offered to tax, as per Section 199 of the Act read with Rule 37BA. It also held that the addition made by the AO on account of notional expenses was a double disallowance, as the assessee had already disallowed them.

The Tribunal noted that for A.Y. 2016-17, the AO had allowed the exemption under Sections 11 and 12 in the assessee's own case. Considering this, the Tribunal quashed the orders of the lower authorities and remitted the matter back to the AO for fresh adjudication, directing the AO to consider the previous assessment order and provide an opportunity of hearing to the assessee.

The Tribunal noted an ambiguity in the CIT(A)'s order, which inconsistently referred to both refund of advance tax and MAT credit. It reiterated that interest u/s 244A is payable on refunds arising from advance tax but not on MAT credit. The issue was remanded to the Assessing Officer for verification to determine the true nature of the refund.

The Tribunal held that Itochu India did not habitually exercise the authority to conclude contracts, maintain stock for delivery, or habitually secure orders for the assessee. Itochu India primarily acted as a communication channel and its income from the assessee was at arm's length.

The Tribunal held that penalty proceedings are quasi-criminal in nature, requiring the Revenue to establish facts independently of the assessment order. The AO's reliance solely on the assessment order and non-compliance with CBDT circulars regarding the timing of penalty references vitiated the penalty.

The Tribunal held that penalty proceedings are quasi-criminal in nature, requiring the Revenue to establish facts independently of the assessment order. The AO's reliance solely on the assessment order and non-compliance with CBDT circulars regarding the timing of penalty references vitiated the penalty.

The Tribunal held that penalty proceedings are quasi-criminal in nature, requiring the Revenue to establish facts independently of the assessment order. The AO's reliance solely on the assessment order and non-compliance with CBDT circulars regarding the timing of penalty references vitiated the penalty.

The Tribunal agreed that the jurisdictional issue regarding the section 148 notice needed fresh adjudication. Consequently, the matter was restored to the file of the CIT(A) with a direction to re-examine the issue after providing a fair opportunity to the assessee. The appeal was allowed for statistical purposes.

The Tribunal held that penalty proceedings are quasi-criminal in nature, requiring the Revenue to establish facts independently of the assessment order. The AO's reliance solely on the assessment order and non-compliance with CBDT circulars regarding the timing of penalty references vitiated the penalty.

The Tribunal held that penalty proceedings are quasi-criminal in nature, requiring the Revenue to establish facts independently of the assessment order. The AO's reliance solely on the assessment order and non-compliance with CBDT circulars regarding the timing of penalty references vitiated the penalty.

The Tribunal held that sales tax subsidies and Cenvat/Excise refunds are capital receipts and excludible from book profit computation. It also allowed a portion of foreign travel expenses and corrected an understatement of long-term capital gain.

The Tribunal, relying on the Delhi High Court's judgment in Pr. CIT vs. Ojjus Medicare Pvt. Ltd. & Ors., held that the assessment for AY 2012-13 was beyond the "relevant assessment year." Since the assessee's books of account were handed over to the AO in AY 2022-23, the ten-year block period, as computed from AY 2022-23, would not cover AY 2012-13. Therefore, the assumption of jurisdiction u/s 153C was invalid.

The Tribunal set aside and remanded the issues of bad debt disallowance (Ground 2) and long-term loss disallowance (Ground 3) to the AO for fresh consideration. It found that the AO had incorrectly rejected the bad debt claim by misinterpreting business activity and failed to consider available evidence for the long-term loss. Ground 1 was noted as general and not adjudicated, while Ground 4 (Section 14A disallowance) was dismissed as not pressed by the assessee.

The Tribunal allowed the appeal regarding advertisement expenses, following a coordinate bench decision. It dismissed the ground related to employee ESI contributions, citing the Supreme Court's decision in Checkmate Services Pvt. Ltd. Other grounds concerning transfer pricing adjustments were partly allowed or remanded for fresh adjudication.

The Tribunal allowed the appeal on Ground 2, deleting interest disallowance on building investment as it was from interest-free funds, and Ground 3, deleting interest disallowance on plot advances made from partner's capital/interest-free funds. It also allowed Ground 4 & 5, directing the deletion of adhoc disallowances on telephone, travelling, car, staff welfare, and miscellaneous expenses, as the AO failed to provide specific instances of unverifiable expenditure.

The Tribunal held that penalty proceedings are quasi-criminal in nature, requiring the Revenue to establish facts independently of the assessment order. The AO's reliance solely on the assessment order and non-compliance with CBDT circulars regarding the timing of penalty references vitiated the penalty.

The Tribunal allowed the appeal regarding advertisement expenses, following a coordinate bench decision. It dismissed the ground related to employee ESI contributions, citing the Supreme Court's decision in Checkmate Services Pvt. Ltd. Other grounds concerning transfer pricing adjustments were partly allowed or remanded for fresh adjudication.

The Tribunal held that the income earned by the assessee does not fall under the definition of royalty as per the India-USA DTAA. It also found that the 'make available' clause for fees for technical services was not satisfied.

The Tribunal held that sales tax subsidies and Cenvat/Excise refunds are capital receipts and excludible from book profit computation. It also allowed a portion of foreign travel expenses and corrected an understatement of long-term capital gain.

The Tribunal held that penalty proceedings are quasi-criminal in nature, requiring the Revenue to establish facts independently of the assessment order. The AO's reliance solely on the assessment order and non-compliance with CBDT circulars regarding the timing of penalty references vitiated the penalty.

The Tribunal held that the assessee did not have a Permanent Establishment in India. The agreement clearly defined CIPL as an independent distributor, not an agent with the authority to conclude contracts on behalf of the assessee.

The Tribunal held that the tax authorities failed to rebut the statutory evidence of the Tax Residency Certificate (TRC) with cogent evidence. The Tribunal found that the assessee's operations as an investment platform were genuine and that the central management and control were indeed in Mauritius.

The Tribunal held that while the identity of shareholders might have been proven by filing ITR and bank accounts, the creditworthiness and genuineness of the transactions were not adequately explained by the assessee. Therefore, the addition made by the Assessing Officer was justified.

The Tribunal held that penalty proceedings are quasi-criminal in nature, requiring the Revenue to establish facts independently of the assessment order. The AO's reliance solely on the assessment order and non-compliance with CBDT circulars regarding the timing of penalty references vitiated the penalty.

The Tribunal remitted the issue back to the file of the Assessing Officer, directing them to pass a fresh order as per law after providing the assessee with a proper opportunity of being heard. This decision was based on the assessee's counsel citing genuine reasons for prior non-appearance, which the ld. DR for Revenue did not object to.

The Tribunal, relying on Supreme Court precedents, found that the lower authorities failed to prove that interest-free funds were diverted for earning tax-free income. It also held that bank charges and bank guarantee charges do not constitute 'interest' for disallowance purposes under Section 14A. Consequently, the disallowance made under Section 14A in respect of interest expenditure was deleted.

The Tribunal held that the seized documents were insufficient to make additions as they lacked details of the payer, payee, mode of payment, or purpose, and were not in the assessee's handwriting or signed by them. No corroborative evidence was provided by the Revenue.

The Tribunal held that the assessee is eligible to claim deduction under Section 54 for both residential units, as the law prior to the amendment in AY 2015-16 allowed for investment in more than one residential house. However, new evidence was filed, requiring fresh examination.

The Tribunal held that the tax authorities erred in not granting the assessee the benefit of the Supreme Court's judgment in Engineering Analysis Centre of Excellence. The Tribunal found that the payments were for software licenses and not for the use of scientific equipment, thus not taxable as royalty.

The Tribunal upheld the CIT(A)'s deletion of notional ALV addition and Section 14A disallowance. It also dismissed the assessee's cross-objection regarding the allocation of advertisement expenses, retainership fees, and director's meeting fees, affirming the CIT(A)'s view on pro-rata allocation for Section 80-IB deduction.