ITAT Delhi Judgments — May 2025

The Tribunal set aside the ex-parte order of the CIT(A) and remanded the matter back for fresh adjudication. The CIT(A) was directed to grant the assessee an opportunity of being heard, consider all evidence, and pass a reasoned order, including on the maintainability of the original proceedings.

The Tribunal held that the expenditure for using the firm's goodwill was not for a prohibited purpose, dismissing the Revenue's grounds. The ad-hoc disallowance of foreign travel expenses and the claim for TDS credit were also upheld in favor of the assessee.

The Tribunal held that the AO failed to pinpoint a specific charging section for the addition. The Tribunal also noted that the assessee was carrying on business and had declared presumptive income, and under Section 44AD, maintaining books of account was not mandatory. Therefore, the addition was deleted.

The Tribunal held that the expenditure incurred for the use of goodwill under a license agreement was not for a purpose prohibited by law and thus allowable. Similarly, the ad-hoc disallowance of foreign travel expenses was not sustainable.

The Tribunal held that the license fee payment for the use of goodwill was not for a prohibited purpose under Section 37 of the Income Tax Act. Regarding foreign travel expenses, the Tribunal found no basis for ad-hoc disallowance and upheld the CIT(A)'s deletion. The TDS credit issue was also affirmed.

The Tribunal held that for assessment years prior to AY 2013-14, interest under Section 234B is not applicable if the income was subject to tax deductible at source. This is because Section 209(1)(d) allows reducing the advance tax liability by the amount deductible at source. The Supreme Court in Mitsubishi Corporation's case has settled this issue. Therefore, the AO's rectification order was not sustainable.

The Tribunal held that the date of recording the satisfaction note by the AO concerning the non-searched person serves as the date of search for initiating action under section 153C. Therefore, assessment for AY 2013-14 should have been under section 153C and not 143(3). The issuance of a notice under section 153C is a prerequisite for assumption of jurisdiction under that section.

The Tribunal noted that the Ld.Sr. DR for the Revenue admitted the applicability of the CBDT Circular. Consequently, the appeal was dismissed as not maintainable, with the liberty for the Revenue to seek restoration if they could show the circular's inapplicability.

The Tribunal held that for completed assessments, additions under Section 153A can only be made if incriminating material is found during the search. In this case, the loose sheet was from a third party, undated, and not directly related to the assessee or the relevant assessment year. Therefore, the assumption of jurisdiction by the AO under Section 153A and the subsequent addition were unsustainable.

The Tribunal decided to remit the issue back to the AO for fresh consideration. The AO is to grant the assessee an opportunity to be heard and consider all evidence, including new evidence. The appeal was allowed for statistical purposes.

The Tribunal affirmed the CIT(A)'s decision to delete the disallowance of interest expenses, citing a coordinate bench's ruling on similar facts. Regarding depreciation on a rented flat, the Tribunal agreed that it should be assessed as income from business if it's part of a composite rent arrangement, but disallowed depreciation if it's purely rental income assessable under 'Income from House Property'. The issue of cash deposits was remitted back to the AO for fresh adjudication.

The Tribunal held that the expenditure for license fee was not for an illegal or prohibited purpose, and the Bar Council of India Rules were not violated. The ad-hoc disallowance of foreign travel expenses was not sustainable. The claim for TDS credit was also upheld.

The Tribunal held that the CIT(E) erred in rejecting the applications without proper factual verification. The expenses on seminars and conferences were found to be for furthering the trust's objects, and the issue of TDS deduction by donors was addressed by relying on High Court decisions.

The Income Tax Appellate Tribunal (ITAT) upheld the decision of the Ld. CIT(A), ruling that the interest paid on delayed EDC is a revenue expenditure and not penal or capital in nature. The Tribunal relied on its own previous decisions for the assessee and precedents like CIT vs. Enchante Jewellery Ltd., affirming that such interest is an allowable business expense, especially when related to projects already completed and sold.

The Tribunal held that the assessment order and the first appellate order were invalid due to violations of statutory provisions and principles of natural justice. The AO failed to provide relied-upon material and an opportunity for cross-examination, which are essential for a valid reassessment.

The Tribunal held that the territorial jurisdiction of the Bench is determined by the location of the Assessing Officer who passed the assessment order. Therefore, the Delhi Benches lacked the territorial jurisdiction to decide these appeals, which should have been filed before the Lucknow Benches.

The Tribunal held that the disallowance of deduction under section 80IB was not justified due to a clerical omission in filing Form 10CCB, especially since the deduction was allowed in previous years and the issue is covered by a precedent. However, the disallowance of PF contribution was upheld.

The Tribunal noted that the assessee had expired and the appeal was filed against a dead person, making it void. Citing High Court judgments, the Tribunal held that such an order is a nullity and cannot be sustained.

The Tribunal held that the transfer of shares and the associated cash transactions did indeed constitute a diversion of the institution's property for the benefit of specified persons (Farooqui family) under Section 13(1)(c) read with Section 13(3) of the Act. Consequently, the denial of exemption under Section 11 by the AO was upheld.

The Tribunal held that the bank passbook is not considered books of account for the purpose of Section 68. Since the assessee filed a return under Section 44AD, the initiation of proceedings under Section 68 was based on a non-existent provision as there were no proper books of account.

The Tribunal held that the assessment framed under Section 143(3) was bad in law and void ab initio as it ought to have been framed under Section 153C, following the date of receipt of incriminating documents, not the date of search. The AO committed a substantive error by excluding the assessment year from the ambit of Section 153C.

The Tribunal condoned the delay, accepting the reasons provided. It was held that since relevant documents were not placed before the CIT(A) and are germane to the issue, the matter should be remitted back to the AO for fresh adjudication.

The Tribunal held that the CIT(A)'s deletion of the addition was justified. The AO's observation of cash entries in the bank statement, without establishing a nexus with an entry operator, did not prove bogus purchases. The AO had not found any defects in the assessee's books of account and had accepted the sales.

The Tribunal held that the jurisdiction of the High Court, and consequently the ITAT, is determined by the location of the Assessing Officer who passed the assessment order. Therefore, the Delhi Benches do not have territorial jurisdiction to decide these appeals as the Assessing Officers are situated in Lucknow.

The Tribunal found shortcomings in the orders of the lower authorities regarding the determination of the fair market value of the shares. The issue was restored to the AO for a fresh assessment, considering all relevant factors including a reconstruction scheme and convertible warrants.

The Tribunal held that the jurisdiction of the ITAT Benches is determined by the location of the Assessing Officer who passed the assessment order. Therefore, the Delhi Benches do not have territorial jurisdiction for these appeals and cross objections.

The Tribunal held that reassessment proceedings under Section 147 cannot be validly reopened if the assessee has furnished full and true particulars at the time of original assessment under Section 143(3), and the AO had applied their mind. In this case, the AO himself admitted an error in the notice and failed to obtain proper approval. The Tribunal quashed the reopening.

The Tribunal held that AMP expenses are not international transactions and consequently, adjustments under BLT and intensity methods are not in accordance with law. The Tribunal also held that CCDs are to be treated as debt, not equity, and deleted the adjustment related to interest on CCDs. Adjustments related to outstanding receivables were also deleted as they were not in accordance with law. The DRP's findings on comparables for reselling services were set aside.

The Tribunal held that the jurisdiction of the High Court and the Tribunal is determined by the location of the Assessing Officer who passed the assessment order. The Supreme Court's decision in PCIT vs. ABC Papers Ltd. was interpreted to mean that even if cases are transferred under Section 127 of the Act, the appellate jurisdiction remains with the High Court in whose jurisdiction the AO is situated.

The Tribunal held that the deposits in the bank accounts were not in cash but were transfers from a partnership firm and a company where the assessee was a director. The source of these deposits was found to be explained and verifiable. Therefore, the addition was deleted.

The tribunal held that the jurisdiction of the ITAT Benches is determined by the location of the Assessing Officer who passed the assessment order, not the location of the assessee or where the case was subsequently transferred. Therefore, the Delhi Benches do not have territorial jurisdiction.

The Tribunal held that the CIT(E) did not sufficiently examine the factual details regarding the expenses incurred on seminars and conferences and their connection to charitable objects. Similarly, the issue of TDS deduction by donors was not adequately examined.

The Tribunal held that for completed assessments, additions under Section 153A cannot be made in the absence of incriminating material found during the search. Statements recorded under Section 132 alone, without corroborative evidence, do not constitute incriminating material.

The Tribunal allowed the miscellaneous application to recall the order due to non-adjudication of the cash deposit issue. In the main appeal, the Tribunal held that the CIT(A) erred in deciding the appeal ex-parte and allowed the appeal to be decided afresh on merits.

The Tribunal held that the CIT(A) was correct in holding the reopening as bad in law, citing the lack of independent inquiry by the AO and the failure to disclose material facts. On merits, the Tribunal found that the assessee had offered the gains from the disputed transactions to tax and that the AO had failed to substantiate the allegations of unjustified additions and commission payments.

The Tribunal held that 'under reporting of income' occurs when a person discloses a smaller amount than their actual income. Since the assessee's declared income was accepted by the Department without any additions, the limb of 'under reporting' under Section 270A was not applicable.

The Tribunal held that the assumption of jurisdiction under Section 147/148 of the Act by a non-jurisdictional officer is illegal and bad in law. Consequently, the reassessment proceedings and the additions made are quashed.

The Tribunal found that the assessee had substantially complied by investing in the plot before filing the return. It was held that Section 54F aims to promote investment in residential houses and the cost of the plot is part of the house cost. The Tribunal directed the AO to recalculate the capital gain.

The Tribunal held that the AO/CIT(A) cannot invoke Sections 68 or 69A when the assessee has already declared the source of cash deposits in their books of accounts and the lower authorities lack contrary material. The addition made by the AO was deleted.

The Tribunal held that the reassessment proceedings were void ab initio as the AO failed to demonstrate escapement of income and the necessity of reopening, especially after four years, without proving failure on the assessee's part to disclose material facts.

The Tribunal held that the date of recording the satisfaction note by the AO is the deemed date of search for initiating proceedings under section 153C. In this case, no notice under section 153C was issued, and the assessment was done under section 143(3), which was not sustainable.

The Tribunal held that the technical know-how fee paid to JDIL was a legitimate business expense and the disallowance by the AO was based on a change of opinion. The expenses related to the captive power plant were substantiated. For Section 14A, the Tribunal agreed with the CIT(A) that disallowance should only be on investments yielding exempt income, aligning with High Court decisions.

The Tribunal held that the disallowance of technical know-how fees was not justified as the services were genuine, substantiated by documentation, and accepted by ONGC. Similarly, the disallowance of power and fuel expenses was deleted as the captive power plant's operations were established. The disallowance under Section 14A was also restricted based on High Court pronouncements.

The Tribunal held that the jurisdiction of the Appellate Tribunal is determined by the location of the Assessing Officer who passed the assessment order. Even if cases are transferred under Section 127 of the Income Tax Act, the High Court within whose jurisdiction the AO passed the order retains appellate jurisdiction. Therefore, the Delhi Benches do not have territorial jurisdiction.

The Tribunal held that the AO had failed to conduct necessary inquiries and verifications, particularly concerning the claim of Long Term Capital Gains (LTCG) exemption, making the assessment order erroneous and prejudicial to the revenue. The Tribunal upheld the PCIT's order and dismissed the assessee's appeal.

The Tribunal admitted additional evidence (registered power of attorney) and remitted the issue back to the AO for fresh adjudication. The assessee was to be given an opportunity to be heard and present further evidence.

The Tribunal held that the payment of license fee for the use of goodwill is not an expenditure for a prohibited purpose and thus allowable. The ad-hoc disallowance of foreign travelling expenses was not sustainable, and the TDS credit claim was allowed.