ITAT Surat Judgments — July 2018

The Tribunal upheld the penalty under Section 271(1)(c) as the assessee failed to provide sufficient evidence to prove the genuineness of the cash credits, despite multiple opportunities. The assessee's non-compliance and lack of explanation led to the conclusion of concealed income.

The Tribunal held that the assessee's claim of business income was not substantiated as the property was treated as a capital asset in its books and exemption under Section 54F was claimed. The Tribunal also noted that the assessee did not make a claim before the AO that the stamp duty valuation exceeded the fair market value, thus the AO was not obligated to refer the matter to the DVO.

The Tribunal held that the SEZ Act, particularly Section 51, overrides the Income Tax Act. Based on government instructions and judicial precedents, trading in the nature of re-export of imported goods is considered a service eligible for deduction under Section 10AA.

The Tribunal upheld the denial of deduction under Section 80IB(10). It was found that the new development permission was for a different project and was obtained after the original approval had lapsed, thus not fulfilling the conditions for the deduction.

The Tribunal held that the appeal was not maintainable as per CBDT Circular No. 3/2018, which revised the monetary limit for filing appeals to the Tribunal to Rs. 20 Lakhs. The case did not fall under any exceptions to this circular.

The Tribunal held that the trust's objects, including promoting education and welfare activities, fall within the definition of charitable purposes. Therefore, the CIT was not justified in rejecting the 80G application solely on the ground of pending 12A registration.

The Tribunal upheld the CIT(A)'s decision to delete the addition. It found that the assessee had provided satisfactory explanations for the seized papers and that the retracted disclosure was not based on cogent seized material.

The Tribunal condoned the 39-day delay in filing the appeals before the CIT(A) as it was found to be bonafide due to improper service of the assessment order. The appeals were restored to the CIT(A) for adjudication on merits.

The Tribunal held that the write-off of loans to a subsidiary cannot be treated as a revenue expenditure or bad debt under Section 36(1)(vii) as it does not meet the conditions. However, it allowed weighted deduction under Section 35(2AB) for expenses incurred for scientific research.

The Tribunal held that the cash deposits were not satisfactorily explained as genuine business sales. However, considering the assessee filed under Section 44AD, the addition was restricted to the peak credit balance of Rs. 3,51,042/-. The income declared as business income was directed to be treated as such, instead of income from other sources.

The Tribunal held that the gift was supported by the donor's financial statements and return of income, showing substantial capital. The AO cannot deem the gift as fictitious income of the assessee without proceeding against the donor.

The Tribunal dismissed the Revenue's appeal due to low tax effect. The Tribunal allowed the assessee's cross-objection, holding that interest received on delayed payment for plant sale was business income and should be considered for partner's remuneration.

The Tribunal upheld the CIT(A)'s deletion of the foreign exchange loss, finding the AO's logic faulty. However, it confirmed the additions for the gift and cash loans, as the assessee failed to establish their genuineness and creditworthiness.

The Tribunal held that the write-off of loans to a subsidiary cannot be treated as a revenue expenditure or bad debt under Section 36(1)(vii) as it does not meet the conditions. However, it allowed weighted deduction under Section 35(2AB) for expenses incurred for scientific research.

The Tribunal held that no addition on account of net profit rate was required as the assessee's disclosed net profit rate of 3.26% was higher than the rate upheld in previous years. However, the addition made on account of sundry creditors was upheld as the assessee failed to provide sufficient evidence.

The Tribunal upheld the CIT(A)'s decision, finding no justifiable basis for the AO's additions regarding cash credit and agricultural expenditure. It also held that the assessee was eligible for deduction under Section 54B as the investment was made before the due date stipulated under Section 139(4).

The Tribunal held that the loan to the sister concern was not justified by commercial expediency, and the interest income was rightly added. However, expenses on spare parts for machinery and foreign travel were considered revenue expenditure and allowable.