DCIT Vs Sathyabama Ramachandran (ITAT Chennai)
The appeal before the Income Tax Appellate Tribunal (ITAT) Chennai was filed by the Deputy Commissioner of Income Tax (DCIT) against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], NFAC, Delhi, dated 08.02.2025, concerning the Assessment Year (AY) 2017–18. The revenue contested the deletion of an addition made by the Assessing Officer (AO) in relation to an amount received by the assessee, Sathyabama Ramachandran, from Elior India Catering LLP.
The Revenue argued that the CIT(A) erred in deleting the additions made by the AO by accepting new claims made before the appellate authority in violation of Rule 46A, as there was no compliance during the assessment proceedings. It was further contended that the CIT(A) failed to appreciate that a “transfer” includes relinquishment or extinguishment of rights and that the reduction in the assessee’s profit-sharing ratio in the firm M/s CRCL LLP amounted to a taxable transfer.
The assessee had filed the original return of income on 04.11.2017 declaring ₹76,00,680 and a revised return on 01.03.2018 declaring ₹77,68,620. Pursuant to a notice under Section 148, the assessee again filed a return on 11.03.2021 with the same declared income and refund claim. The dispute centered around an amount of ₹1,98,86,210 received from Elior India Catering LLP, which the AO treated as goodwill and taxed under “Income from Other Sources.” The assessee argued that the amount represented compensation for the reduction in her profit-sharing ratio in CRCL LLP from 10% to 4.9%, not goodwill or taxable income.
