ITAT Delhi Judgments — August 2024

The Tribunal held that the PCIT erred in invoking Section 263 as the AO had made due inquiries and allowed the deduction based on a plausible view supported by Tribunal decisions. The assessment order was not erroneous simply because the PCIT disagreed with the AO's view.

The Tribunal affirmed the CIT(A)'s decision, finding that the assessee's activities, including sponsorship for international sports events, were non-profit driven and aimed at motivating sportspersons, with expenses often exceeding sponsorship receipts. It was held that these activities were not commercial and the Supreme Court judgment in the AUDA case was not applicable to the assessee.

The Tribunal held that the conveyance deeds were registered in the name of Murlidhar Infracon Pvt. Ltd., and the assessee acted merely as a commission agent. There was no evidence that the assessee made the payments.

The Tribunal found that the assessee had sufficiently proved the investor company's existence, identity, and creditworthiness through MCA records, income tax returns, balance sheets showing substantial shareholder funds, and bank statements reflecting trading activities. Since the investment was received via banking channels and used as capital, the addition made under Section 68 was deleted.

The Tribunal held that additions made on account of jewellery received as wedding gifts were to be deleted due to sufficient substantiation, while additions for smaller birthday gifts were confirmed due to lack of details. Additions related to cash found during the search were also upheld. Penalties on notional interest were dismissed as the underlying additions were not sustainable.

The Tribunal held that additions made on account of jewellery received as wedding gifts were to be deleted due to sufficient substantiation, while additions for smaller birthday gifts were confirmed due to lack of details. Additions related to cash found during the search were also upheld. Penalties on notional interest were dismissed as the underlying additions were not sustainable.

The Tribunal held that additions made on account of jewellery received as wedding gifts were to be deleted due to sufficient substantiation, while additions for smaller birthday gifts were confirmed due to lack of details. Additions related to cash found during the search were also upheld. Penalties on notional interest were dismissed as the underlying additions were not sustainable.

The Tribunal held that the conveyance deeds were registered in the name of Murlidhar Infracon Pvt. Ltd., and the assessee acted merely as a commission agent. There was no evidence that the assessee made the payments.

The Tribunal held that additions made on account of jewellery received as wedding gifts were to be deleted due to sufficient substantiation, while additions for smaller birthday gifts were confirmed due to lack of details. Additions related to cash found during the search were also upheld. Penalties on notional interest were dismissed as the underlying additions were not sustainable.

The Tribunal held that additions made on account of jewellery received as wedding gifts were to be deleted due to sufficient substantiation, while additions for smaller birthday gifts were confirmed due to lack of details. Additions related to cash found during the search were also upheld. Penalties on notional interest were dismissed as the underlying additions were not sustainable.

The Tribunal dismissed the assessee's additional grounds regarding Dividend Distribution Tax (DDT) by following the Special Bench decision in Total Oil India Pvt Ltd. The Tribunal also dismissed the revenue's appeal concerning depreciation on software licenses.

The Tribunal held that additions made on account of jewellery received as wedding gifts were to be deleted due to sufficient substantiation, while additions for smaller birthday gifts were confirmed due to lack of details. Additions related to cash found during the search were also upheld. Penalties on notional interest were dismissed as the underlying additions were not sustainable.

The Tribunal dismissed the assessee's additional grounds regarding Dividend Distribution Tax (DDT) by following the Special Bench decision in Total Oil India Pvt Ltd. The Tribunal also dismissed the revenue's appeal concerning depreciation on software licenses.

The Tribunal held that the Assessing Officer failed to record proper satisfaction regarding the impact of the seized material on the assessee's total income before initiating proceedings under Section 153C. Therefore, the proceedings were initiated without proper jurisdiction.

The Tribunal deemed it appropriate to grant the assessee a further opportunity to present its case effectively before the CIT(A). Consequently, the issue was set aside for de novo adjudication by the CIT(A), with directions to provide a proper hearing and consider all evidence. The assessee's appeal was allowed for statistical purposes.

The Tribunal upheld the CIT(A)'s decision to tax the Rs. 11 crores received on sale of trademark, considering it a trading receipt. The Tribunal also dismissed the Revenue's appeal against the deletion of penalty.

The Tribunal held that additions made on account of jewellery received as wedding gifts were to be deleted due to sufficient substantiation, while additions for smaller birthday gifts were confirmed due to lack of details. Additions related to cash found during the search were also upheld. Penalties on notional interest were dismissed as the underlying additions were not sustainable.

The Tribunal held that the Double Taxation Avoidance Agreement (DTAA) does not apply to dividend distribution tax paid by a domestic company, unless specifically provided for in the treaty. Therefore, the tax rate applicable is as per Section 115-O of the Act, not the DTAA rate.

The Tribunal held that additions made on account of jewellery received as wedding gifts were to be deleted due to sufficient substantiation, while additions for smaller birthday gifts were confirmed due to lack of details. Additions related to cash found during the search were also upheld. Penalties on notional interest were dismissed as the underlying additions were not sustainable.

The Tribunal held that the Assessing Officer failed to record proper satisfaction regarding the impact of the seized material on the assessee's total income before initiating proceedings under Section 153C. Therefore, the proceedings were initiated without proper jurisdiction.

The Tribunal held that additions made on account of jewellery received as wedding gifts were to be deleted due to sufficient substantiation, while additions for smaller birthday gifts were confirmed due to lack of details. Additions related to cash found during the search were also upheld. Penalties on notional interest were dismissed as the underlying additions were not sustainable.

The Tribunal held that additions made on account of jewellery received as wedding gifts were to be deleted due to sufficient substantiation, while additions for smaller birthday gifts were confirmed due to lack of details. Additions related to cash found during the search were also upheld. Penalties on notional interest were dismissed as the underlying additions were not sustainable.

The Tribunal held that additions made on account of jewellery received as wedding gifts were to be deleted due to sufficient substantiation, while additions for smaller birthday gifts were confirmed due to lack of details. Additions related to cash found during the search were also upheld. Penalties on notional interest were dismissed as the underlying additions were not sustainable.

The Tribunal allowed the appeal, finding that the ad-hoc expense disallowances were not justified as the assessee's books were maintained, produced, and no specific defects were found or section 145(3) invoked. Regarding the cash deposits, the Tribunal held that the assessee had sufficient available cash balance, as per its cash book, to explain the source of the deposits made during demonetization.

The Tribunal rejected the assessee's request to transfer the appeals to Kolkata, affirming Delhi's jurisdiction. For AY 2017-18, the addition under section 43B regarding service tax was deleted because the assessee had not claimed it as a deduction and had routed it as a balance sheet item. However, the disallowance of employees' contribution to PF/ESI was upheld, citing the Supreme Court's decision in *Checkmate Services Pvt. Ltd Vs. CIT*. The decisions for AY 2017-18 applied to AY 2019-20, and the ground challenging the late filing fee u/s 234F for AY 2019-20 was dismissed as not pressed.

The Tribunal held that the PCIT's revisional order u/s 263 was unsustainable. For unabated assessments, the AO could not have examined the 40A(3) issue in 153A proceedings without incriminating material. Crucially, as the assessments were passed u/s 153A with prior approval u/s 153D, they could not be revised u/s 263 without a finding that the approval itself was vitiated or erroneous.

Relying on the jurisdictional High Court's 'clean slate' approach, the Tribunal held that since the revenue had not lodged its claim before the RP and no monies were allocated for statutory dues in the NCLT order, continuing the appeal would serve no purpose. The Tribunal concluded that even if the revenue succeeded, it could not recover any dues due to its failure to implead itself in the CIRP.

The Tribunal held that the assessee successfully demonstrated that the cash deposits were made from prior cash withdrawals of Rs.20 lakhs in October 2010. Citing precedents, the Tribunal ruled that an explanation of cash deposits being from earlier withdrawals cannot be rejected solely due to a time gap, especially without contrary evidence of other usage of the withdrawn funds. Thus, the source of cash was established.

The Tribunal upheld the CIT(A)'s decision to tax the Rs. 11 crores received on sale of trademark, considering it a trading receipt. The Tribunal also dismissed the Revenue's appeal against the deletion of penalty.

The Tribunal found the findings of the AO and CIT(A) to be cryptic and based on a shallow assessment order, indicating a failure to conduct proper inquiry regarding the alleged loans taken by the minor child. Consequently, the Tribunal restored the issue back to the file of the AO for fresh adjudication (denovo assessment proceedings). The AO is directed to grant the assessee reasonable opportunity to make submissions and consider all furnished documents.

The Tribunal held that the PCIT's revisional order u/s 263 was unsustainable. For unabated assessments, the AO could not have examined the 40A(3) issue in 153A proceedings without incriminating material. Crucially, as the assessments were passed u/s 153A with prior approval u/s 153D, they could not be revised u/s 263 without a finding that the approval itself was vitiated or erroneous.

The Tribunal held that the Assessing Officer failed to record proper satisfaction regarding the impact of the seized material on the assessee's total income before initiating proceedings under Section 153C. Therefore, the proceedings were initiated without proper jurisdiction.

The Tribunal held that the AO's treatment of the received properties as capital gains was justified, as it arose from the relinquishment of rights under a compromise deed. The assessee's contention that capital gains cannot be taxed on a purchaser was found to be factually incorrect in this context.

The Tribunal rejected the assessee's request to transfer the appeals to Kolkata, affirming Delhi's jurisdiction. For AY 2017-18, the addition under section 43B regarding service tax was deleted because the assessee had not claimed it as a deduction and had routed it as a balance sheet item. However, the disallowance of employees' contribution to PF/ESI was upheld, citing the Supreme Court's decision in *Checkmate Services Pvt. Ltd Vs. CIT*. The decisions for AY 2017-18 applied to AY 2019-20, and the ground challenging the late filing fee u/s 234F for AY 2019-20 was dismissed as not pressed.

The Tribunal held that the Assessing Officer failed to record proper satisfaction regarding the impact of the seized material on the assessee's total income before initiating proceedings under Section 153C. Therefore, the proceedings were initiated without proper jurisdiction.

The Tribunal held that additions made on account of jewellery received as wedding gifts were to be deleted due to sufficient substantiation, while additions for smaller birthday gifts were confirmed due to lack of details. Additions related to cash found during the search were also upheld. Penalties on notional interest were dismissed as the underlying additions were not sustainable.

The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision. It held that deemed dividend under Section 2(22)(e) is taxable in the hands of the shareholder, not the loan recipient company, citing Delhi High Court and Supreme Court precedents. For deemed interest under Section 56(1), the Tribunal ruled that there is no statutory provision to tax notional interest savings on interest-free loans as income in the borrower's hands.

The Tribunal held that Section 44AD was incorrectly applied by the AO as the assessee's turnover exceeded Rs. 1 crore. Taking into account all facts, the Tribunal directed the Assessing Officer to re-compute the income by estimating the net profit at 5% of the gross turnover, instead of the 8% previously applied.

The tribunal held that the factum of rendering of services by the Associated Enterprises (AEs) was proved, and the principle of consistency was violated as the AO deviated from previous years' orders without proper justification. The tribunal also found merit in the assessee's contention regarding the incorrect computation of the Arm's Length Price (ALP) for royalty payments.

The Tribunal held that the assessee had successfully proved the source of cash deposits by providing evidence of cash withdrawals, compensation received by his wife and father, and agricultural income. Therefore, the assessment order was quashed.

The Tribunal acknowledged the genuine difficulties faced by the assessee, which prevented them from proper compliance and prosecution of their appeal before the CIT(A). Finding that the CIT(A) had dismissed the appeal for non-prosecution without a merits-based adjudication, the Tribunal decided to restore the appeal to the file of the CIT(A) for a de novo adjudication, ensuring the assessee a reasonable opportunity to be heard and present fresh evidence.

The Tribunal, relying on its own precedents, held that the disallowance of CSR expenditure under Section 37(1) does not bar a claim for deduction under Section 80G. It clarified that while CSR expenditure is an application of income and not for business purposes, it remains part of the total income, thus qualifying for Section 80G deduction if all other conditions of that section are met.

The Tribunal condoned the 122-day delay in filing the appeal, determining it was not willful but due to the Authorized Representative's mistake. It found the Ld.CIT(A)'s ex-parte order to be cryptic and lacking merits consideration. Therefore, the matter was restored to the Assessing Officer for a fresh order after giving adequate opportunity to the assessee.

The Tribunal held that the royalty income received from non-resident OEMs was not taxable in India, following its own previous decisions. The AO's additions were based on assessment orders that had been reversed by the Tribunal in earlier years.

The Tribunal held that the royalty income received from non-resident OEMs, where the patents are used in manufacturing outside India, is not taxable in India. The Tribunal followed its own previous decisions on identical issues for earlier assessment years.

Following judicial precedents, particularly the Full Bench decision of the Bombay High Court in Mohd. Farhan A Shaikh vs DCIT and the Supreme Court's decision in Dilip N. Shroff Case, the Tribunal held that an omnibus show-cause notice, which does not delete or strike off inapplicable parts, indicates non-application of mind and is fatal to the penalty proceedings. Therefore, the Tribunal directed the deletion of the penalty levied under section 271(1)(c) of the Act.

The Tribunal held that the royalty income received from non-resident OEMs was not taxable in India, following its own previous decisions. The AO's additions were based on assessment orders that had been reversed by the Tribunal in earlier years.

The Tribunal restored the appeal to the file of the Assessing Officer (AO). The AO was directed to re-examine the assessee's contentions regarding the clerical mistake in the tax audit report. If the contentions are found to be true, the AO is instructed to delete the impugned addition.

The Tribunal held that the AO failed to conduct proper inquiries (u/s 133(6) or 131(1)) into the genuineness and creditworthiness of the family donors after the assessee provided her explanation. It accepted the assessee's contention that the funds were legitimate family gifts received over time and deposited during the demonetization period due to practical difficulties, directing the deletion of the Rs. 10.98 lakh addition. However, the Tribunal dismissed the ground challenging the assessment for not specifying the head of income under Section 115BBE, citing a Delhi High Court ruling.

The Tribunal found that the assessee had provided detailed evidence including cash sales bills, stock registers, and a cash book showing a sufficient cash balance (Rs. 1,24,88,229/- on 08.11.2016) to cover the deposits. It noted that stock was correspondingly reduced, and purchases were not doubted. The Tribunal concluded that the lower authorities had no basis to treat the cash sales as bogus or reject the books of account, and the sales were even accepted by VAT authorities. Consequently, the addition of Rs. 88,42,038/- was deleted.