The Tribunal partly allowed the appeal, asserting that once supporting documents are filed, genuine capital expenses like a boundary wall cannot be dismissed as bogus. The judgment confirms that only costs directly enhancing the asset’s value (like construction) are eligible as a cost of improvement, leading to the disallowance of security guard charges.
The Tribunal allowed the taxpayer’s appeal, confirming that suspicion alone cannot lead to an addition under section 69A, especially when sales records and VAT returns were furnished. The ruling confirmed that high cash sales were justified as per the Government’s notification allowing petrol pumps to accept demonetised notes.
Following the ratio of the Delhi High Court, the ITAT held that the rubber stamp approval {u/s 153D} was non est in law, leading to the quashing of all assessments and the deletion of huge additions made against the assessee. The key takeaway for taxpayers is the success of challenging search assessments on the legal ground of invalid, mechanical u/s 153D approval.
The Income Tax Appellate Tribunal (ITAT) Chennai ruled in the case of Late Ramasamy Pongianna Gounder Desamani Vs ITO that a loan from one company to another, where a common shareholder holds less than 20% of the voting power in the borrowing company, cannot be taxed as deemed dividend under Section 2(22)(e) of the Income-tax Act, 1961.
The Tribunal found the principles of natural justice were violated when the assessee, a villager unfamiliar with e-proceedings, was denied the opportunity to challenge the property’s stamp duty valuation and request a reference to the Departmental Valuation Officer (DVO) under Section 50C(2) of the Income Tax Act.
Chennai ITAT ruled that a police canteen operating on the principle of mutuality is not carrying on ‘business’ under the Income-tax Act, making the mandatory tax audit provision of u/s44AB inapplicable, despite high turnover reflected in GST returns. The u/s 271 B penalty for non-filing was deleted.
The ITAT dismissed an assessee’s quantum appeal, confirming that a ₹10.42 Cr write-off for decommissioned windmills was a capital loss, not a revenue deduction. Since the trust offered this as business income, the ITAT held the only permissible treatment was adjustment in the block of assets.
The ITAT set aside a Section 69A addition for unexplained cash payments, ruling that the AO must first verify the facts. The case was remanded because the assessee claimed an original allottee made the payment but failed to provide the plot’s transfer agreement as proof.
CAAR, Mumbai, ruled that imported components for assembling Low Voltage Differential Signaling (LVDS) cameras are classified as Other Parts under Customs Tariff Heading 85299090.
In a case involving a slum rehabilitation developer who did not file a return or maintain books, ITAT Pune applied a 12% estimated net profit rate on total gross receipts of Rs.1,93,64,405 to compute taxable income. This decision provides a precedent for estimating income in the construction sector where audited accounts are unavailable, allowing for usual business deductions.
