ITAT Delhi Judgments — October 2024

The Tribunal held that actual payment of tax in the UAE is not a prerequisite for claiming treaty benefits. The right of the UAE to tax, even if not exercised, is sufficient to invoke the DTAA, following the principle laid down in the Azadi Bachao Andolan case.

The Tribunal held that the reopening proceedings under sections 147/148 were void ab initio because the company's name was struck off before the issuance of the notice. The exercise of jurisdiction under section 147 was vitiated as the entity ceased to exist. The Tribunal quashed the impugned order of the CIT(A) to that extent, distinguishing previous judgments relied upon by the CIT(A) as they involved cases where the company's name was restored by NCLT.

The Tribunal found that the assessment orders were passed on March 21, 2022, but the mandatory approval from the JCIT under Section 153D was only received by the AO on March 23, 2022. Since Section 153D explicitly mandates prior approval for assessment orders under Section 153A, the assessment orders passed without such prior approval were deemed to be in clear violation of the statutory provisions. Consequently, the Tribunal quashed the assessment orders for both assessment years.

The Tribunal dismissed both appeals as non-maintainable, citing CBDT Circular No. 09 of 2024, which sets a monetary limit for Revenue appeals, as the tax effect was below Rs. 60 lacs. The Department was granted liberty to recall the order if the cases fall under the exceptions mentioned in CBDT Circular No. 5 of 2024.

The Tribunal held that depreciation is a privilege and can only be claimed on the basis of depreciation 'actually allowed', not notionally. Since no depreciation was actually allowed in prior years, the assessee was entitled to claim depreciation on the actual cost of the assets in the current year.

The Tribunal found that the CIT(E)'s rejection of the fresh application on 30.09.2023, based on a prior rejection due to limitation and a perceived lack of change in the trust's objectives, was a wrong finding of fact. The matter was remitted back to the CIT(Exemptions) for fresh consideration of the application on its merits, without drawing any adverse inference from the previous rejection.

The Tribunal accepted the request for withdrawal of the appeal ITA No.2898/Del/2024. Consequently, the present appeal was dismissed as withdrawn.

The tribunal held that the assessee, possessing a valid TRC, is entitled to treaty benefits under Article 13 of the India-Mauritius DTAA. It ruled that STCG from shares acquired before April 1, 2017, amounting to Rs. 25,22,54,936/-, is not taxable, affirming TRC as sufficient proof of residency based on CBDT circulars and Supreme Court judgments. The tribunal found no conclusive evidence to support the AO's claims of the assessee being a shell/conduit company, and accordingly, directed the deletion of the Rs. 33,840 STCG addition and the consequential interest levied under Sections 234B and 234C.

The Tribunal dismissed both appeals as non-maintainable, citing CBDT Circular No. 09 of 2024, which sets a monetary limit for Revenue appeals, as the tax effect was below Rs. 60 lacs. The Department was granted liberty to recall the order if the cases fall under the exceptions mentioned in CBDT Circular No. 5 of 2024.

The Tribunal condoned the delay in filing the appeal before the CIT(A), finding the reasons furnished by the assessee to be bonafide and not a result of negligence. Citing Supreme Court precedents on adopting a liberal approach to condonation of delay, the Tribunal restored the appeal to the CIT(A) for re-adjudication on merits, ensuring a reasonable opportunity of hearing for the assessee.

The tribunal directed the Assessing Officer to consistently apply the profit attribution methodology adopted from assessment years 2016-17 to 2021-22 to the earlier assessment years (2013-14 to 2015-16), as the assessee agreed to this method. For issues of short grant of TDS credit and interest under Section 244A, the AO was directed to verify and grant relief in accordance with the law. Other grounds were dismissed as premature or not pressed.

The tribunal directed the Assessing Officer to consistently apply the profit attribution methodology adopted from assessment years 2016-17 to 2021-22 to the earlier assessment years (2013-14 to 2015-16), as the assessee agreed to this method. For issues of short grant of TDS credit and interest under Section 244A, the AO was directed to verify and grant relief in accordance with the law. Other grounds were dismissed as premature or not pressed.

The Tribunal upheld the CIT(A)'s decision to delete the additions. It found that the lender companies had creditworthiness, were in the business of lending, responded to notices, and the assessee paid interest with TDS and repaid the loans.

The Tribunal dismissed the appeal filed by the Revenue as not maintainable. This decision was based on the fact that the tax effect of Rs. 57,08,304/- was below the revised monetary threshold of Rs. 60 lakhs for departmental appeals to the ITAT, as stipulated by CBDT Circular No. 09/2024 dated 17.09.2024.

The Tribunal held that depreciation is a privilege and can only be claimed on the basis of depreciation 'actually allowed', not notionally. Since no depreciation was actually allowed in prior years, the assessee was entitled to claim depreciation on the actual cost of the assets in the current year.

The Tribunal upheld the CIT(A)'s decision to delete the additions. It found that the lender companies had creditworthiness, were in the business of lending, responded to notices, and the assessee paid interest with TDS and repaid the loans.

The Tribunal, relying on the Supreme Court decision in Pr. CIT vs. Abhisar Buildwell Pvt. Ltd., held that no addition can be made in an assessment framed under section 153A without incriminating material found during the search. Since the additions by the AO were not based on such material, the Tribunal quashed the assessment.

The Tribunal, relying on the Supreme Court decision in Pr. CIT vs. Abhisar Buildwell Pvt. Ltd., held that no addition can be made in an assessment framed under section 153A without incriminating material found during the search. Since the additions by the AO were not based on such material, the Tribunal quashed the assessment.

The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision. It held that the disallowance under Section 14A read with Rule 8D should be restricted to investments that have yielded exempt income. The Tribunal noted that this issue was `res integra` and had been consistently decided in the assessee's favour in previous assessment years (2010-11 and 2018-19), with the High Court endorsing the ITAT's action.

The Tribunal held that depreciation is a privilege and can only be claimed on the basis of depreciation 'actually allowed', not notionally. Since no depreciation was actually allowed in prior years, the assessee was entitled to claim depreciation on the actual cost of the assets in the current year.

The Income Tax Appellate Tribunal found that both the Assessing Officer and the CIT(A) denied the assessee a reasonable, adequate, and effective opportunity of being heard, including not providing necessary loose papers. Therefore, the tribunal set aside the order of the CIT(A) and remanded the matter back to the Assessing Officer for fresh adjudication, with directions to provide all relevant documents and ensure proper opportunity of hearing.

The Tribunal, relying on the Supreme Court decision in Pr. CIT vs. Abhisar Buildwell Pvt. Ltd., held that no addition can be made in an assessment framed under section 153A without incriminating material found during the search. Since the additions by the AO were not based on such material, the Tribunal quashed the assessment.

The Tribunal condoned the 5-year delay in filing the cross-objection, acknowledging the peculiar facts and circumstances. Given that the validity of jurisdiction under Section 153C is a fundamental legal issue not adjudicated by the CIT(A), and with both parties agreeing, the Tribunal remitted both the Revenue's appeal and the assessee's cross-objection back to the CIT(A) for fresh adjudication of all issues on merits, in accordance with law and after providing due opportunity to the assessee.

The Tribunal, relying on the Supreme Court decision in Pr. CIT vs. Abhisar Buildwell Pvt. Ltd., held that no addition can be made in an assessment framed under section 153A without incriminating material found during the search. Since the additions by the AO were not based on such material, the Tribunal quashed the assessment.

The Tribunal held that the assessment order was passed on a non-existing entity (M/s Topgrain Distributors Pvt. Ltd.) which had amalgamated prior to the issuance of notices. It was established that the department was aware of the amalgamation through internal communications and assessee's submissions. Following judicial precedents, an assessment order passed on a non-existing entity is void ab initio. Thus, the CIT(A)'s order was upheld.

The Tribunal, relying on the Supreme Court decision in Pr. CIT vs. Abhisar Buildwell Pvt. Ltd., held that no addition can be made in an assessment framed under section 153A without incriminating material found during the search. Since the additions by the AO were not based on such material, the Tribunal quashed the assessment.

The tribunal directed the Assessing Officer to consistently apply the profit attribution methodology adopted from assessment years 2016-17 to 2021-22 to the earlier assessment years (2013-14 to 2015-16), as the assessee agreed to this method. For issues of short grant of TDS credit and interest under Section 244A, the AO was directed to verify and grant relief in accordance with the law. Other grounds were dismissed as premature or not pressed.

The Tribunal noted the assessee's bona fide intention to settle the tax disputes through the Vivad Se Vishwas Scheme, 2024. Citing a similar approach by the Madras High Court, the Tribunal dismissed all pending appeals (both by the revenue and the assessee) with the liberty for the assessee to seek restoration of the appeals if its declaration under the scheme is not accepted by the Revenue.

The Tribunal found that while the AO was justified in rejecting the books, the subsequent best judgment assessment was flawed as it did not adequately consider the assessee's claim of earning commission income or its past history. Citing similar prior cases, the Tribunal remanded the matter back to the AO for a *de novo* assessment. The AO is directed to thoroughly examine the nature of the assessee's turnover (commission vs. sales), its relationship with the Allana Group, and make a fresh assessment after considering all evidence and affording a reasonable opportunity of being heard.

The Tribunal noted the assessee's bona fide intention to settle the tax disputes through the Vivad Se Vishwas Scheme, 2024. Citing a similar approach by the Madras High Court, the Tribunal dismissed all pending appeals (both by the revenue and the assessee) with the liberty for the assessee to seek restoration of the appeals if its declaration under the scheme is not accepted by the Revenue.

The Tribunal held that the transfer of shares of a company does not constitute a transfer of the company's assets, and therefore, the company cannot be taxed on the notional capital gains arising from the property's fair market value. The invocation of Section 147 was also found to be without legal foundation.

The Tribunal observed that the non-deposit of TDS by the buyer was an offense not committed by the assessee. Therefore, the impugned order was set aside, and the matter was remitted back to the Assessing Officer for further verification and allowance of the TDS claim as per law.

The Tribunal held that the PCIT's revisional order was unsustainable. It found that the AO had conducted necessary inquiries regarding the cash deposits and the exemption claimed under Section 10(37). The Tribunal also noted that the PCIT could not compel the AO to initiate penalty proceedings or expand the scope of reassessment beyond the original reasons for reopening.

The Tribunal condoned the 143-day delay in filing the appeal, accepting the reasons provided by the AR. It restored the matter of the addition on merits to the file of the Assessing Officer (AO). The AO is directed to provide the assessee with a fresh opportunity of hearing by serving notice through e-mail and/or post.

The Tribunal noted the assessee's bona fide intention to settle the tax disputes through the Vivad Se Vishwas Scheme, 2024. Citing a similar approach by the Madras High Court, the Tribunal dismissed all pending appeals (both by the revenue and the assessee) with the liberty for the assessee to seek restoration of the appeals if its declaration under the scheme is not accepted by the Revenue.

The Tribunal applied CBDT Circular No.09/2024 dated 17.09.2024, which set a revised monetary limit of Rs.60 Lakhs for filing appeals before the Tribunal. Since the tax effect in this case was below the revised limit, the Tribunal dismissed the Revenue's appeal as not maintainable, granting liberty for re-institution if exceptions to the circular apply.

The Tribunal held that the PCIT erred in invoking Section 263 as the AO had conducted inquiries and the PCIT failed to establish that the assessment order was erroneous and prejudicial to the revenue. The PCIT cannot substitute his opinion for that of the AO or remand the matter for further inquiry without establishing a clear error.

For AY 2015-16, the Tribunal quashed the reassessment, holding that the reasons for reopening were fallacious as the assessee proved genuine purchase, holding, and STT-paid sale of shares prior to any alleged malafide scheme. For AY 2017-18, the Tribunal upheld the CIT(A)'s deletion of the addition, accepting the assessee's explanation of manifold increase in cash sales due to new business agreements, which were duly reflected in VAT returns.

The Tribunal held that reassessment proceedings under Section 147 were not justified when the incriminating material was found during a search at a third party's premises. The proper course of action would have been proceedings under Section 153C.

Applying the 'functional test' established by High Court judgments, the Tribunal held that the banquet hall and sign board, while accommodating the business, are not an 'apparatus' with which the business is carried on, but rather constitute the setting or part of the premises. Therefore, they fall under the definition of 'building' and not 'plant', making the claim for 15% depreciation unsustainable.

Applying the 'functional test' established by High Court judgments, the Tribunal held that the banquet hall and sign board, while accommodating the business, are not an 'apparatus' with which the business is carried on, but rather constitute the setting or part of the premises. Therefore, they fall under the definition of 'building' and not 'plant', making the claim for 15% depreciation unsustainable.

The Tribunal held that the PCIT erred in invoking Section 263 as the AO had conducted inquiries and the PCIT failed to establish that the assessment order was erroneous and prejudicial to the revenue. The PCIT cannot substitute his opinion for that of the AO or remand the matter for further inquiry without establishing a clear error.

The Tribunal upheld the CIT(A)'s decision, finding that the AO failed to establish the assessee's failure to disclose material facts and did not conduct proper investigation before reopening the assessment. The AO also did not follow the prescribed procedures for reopening.

For AY 2015-16, the Tribunal quashed the reassessment, holding that the reasons for reopening were fallacious as the assessee proved genuine purchase, holding, and STT-paid sale of shares prior to any alleged malafide scheme. For AY 2017-18, the Tribunal upheld the CIT(A)'s deletion of the addition, accepting the assessee's explanation of manifold increase in cash sales due to new business agreements, which were duly reflected in VAT returns.

The Tribunal found that the assessee's intention was to avail benefits under Section 11(1) as evidenced by the timely filing of Form 9A and the actual application of funds. It held that the entry under Section 11(2) in the ITR was a bonafide typographical error and condoned it, concluding that Form 10 was not required for accumulation under Section 11(1).

The Tribunal held that the interest liability was ascertained and not contingent, especially since the assessee followed the mercantile system of accounting. The Tribunal noted that similar claims for interest expenditure had been allowed in preceding and succeeding assessment years for the assessee.

The Tribunal found that the assessee's explanation regarding seized documents was uncontroverted and that the CIT(A) failed to provide a proper opportunity of hearing or adjudicate on merits. It also noted the AO's lack of rationale for distinguishing cash deposits in A.Y. 2017-18. Consequently, the income calculation for all assessment years was restored to the Assessing Officer for fresh adjudication, with directions for the assessee to furnish documents and the AO to provide a fair hearing.

The Tribunal found that the CIT(A) had incorrectly applied Section 249(4)(b) of the Act. Consequently, the Tribunal set aside the CIT(A)'s order and restored the matter for fresh adjudication on merits, directing the CIT(A) to admit the appeal and provide the assessee with a reasonable opportunity of being heard.

The Tribunal found that the assessee's explanation regarding seized documents was uncontroverted and that the CIT(A) failed to provide a proper opportunity of hearing or adjudicate on merits. It also noted the AO's lack of rationale for distinguishing cash deposits in A.Y. 2017-18. Consequently, the income calculation for all assessment years was restored to the Assessing Officer for fresh adjudication, with directions for the assessee to furnish documents and the AO to provide a fair hearing.