Topic
The Income Tax Appellate Tribunal (ITAT) Delhi is a quasi-judicial body that hears appeals against orders of the Income Tax Commissioner (Appeals) under the Income-tax Act, 1961.
ITAT Delhi held that a community pre-school, despite lacking formal affiliation, meets the s.2(15) definition of charitable education under the Income Tax Act. Hence trusts operating such schools can secure registration under sections 12AB and 80G for tax exemptions. The decision expands eligibility for early-childhood NGOs.
ITAT Delhi upholds deduction for warranty provisions as accrued liability under Section 37(1) and full R&D expenditure under Section 35(2AB), citing Rotork Controls precedent. Ruling benefits corporates claiming contingent liabilities and innovation expenses.
ITAT Delhi quashes reassessment for AY 2012-13 after finding the prescribed authority’s Section 151 approval lacked independent application of mind. Ruling reaffirms that mechanical approvals violate judicial discipline and render reopening proceedings invalid under CIT vs. S. Goyanka Lime and Chemical Pvt. Ltd. (2015).
ITAT Delhi rules that disallowance under Section 14A read with Rule 8D cannot be factored into book profit computation for MAT under Section 115JB. The ruling clarifies that such disallowances remain excluded from MAT calculations, impacting corporate tax assessments.
ITAT Delhi rules sale of milk by a gaushala trust is incidental to its charitable purpose under Section 2(15) proviso, affirming Section 12A registration. The ruling clarifies that receipts from milk sales do not disqualify trusts from tax exemptions if aligned with primary charitable objectives.
The ITAT Delhi has held that dismissing a tax appeal ex-parte without addressing merits or providing reasons violates Section 250(6) of the Income Tax Act, which mandates reasoned appellate orders. This ruling reinforces that procedural fairness cannot be sacrificed even when notices are allegedly missed, and sets a precedent for taxpayers facing technical dismissals due to administrative or personal hardship.
ITAT Delhi has ruled that cash withdrawn from a proprietor’s capital account shortly before a search can constitute a credible source for unexplained cash, overturning an addition of Rs. 9 lakh under Section 69A. This sets a critical precedent for small business owners facing scrutiny during income tax searches, affirming that ledger entries alone - even without vouchers - may suffice if consistent with business practice and timing.
The ITAT Delhi has ruled that cash deposits made during demonetization, if fully supported by genuine, audited cash sales recorded in the books of account and already taxed as turnover, cannot be reclassified as unexplained income under Section 68. This protects businesses with transparent cash-based operations from double taxation and reinforces that proper bookkeeping is a valid defense against presumptive tax additions.
The ITAT Delhi has ruled that reassessments under Section 153C cannot proceed if the deemed date of search falls on or after April 1, 2021, due to the Finance Act 2021 amendment that eliminated the power to initiate such proceedings beyond that date. This decision protects taxpayers from retrospective application of reassessment powers and clarifies the temporal limits of search-related assessments under the Income Tax Act.
The ITAT Delhi has ruled that an entity pursuing both religious propagation and active charitable work-such as education and medical relief for the underprivileged-cannot be registered solely as a religious body under Section 12AB. This decision ensures that entities fulfilling broader public welfare objectives are not unfairly confined to narrow religious classification, expanding access to tax exemptions for genuinely charitable initiatives.
The ITAT Delhi ruled that disallowance of business expenditure under Section 37(1) is unlawful when the tax authority fails to verify a vendor at the correct address provided by the assessee and ignores supporting KYC, TDS, and payment records. This sets a critical precedent for taxpayers: documentary compliance must be evaluated on substance, not procedural missteps by revenue officials.
The ITAT Delhi has ruled that sending tax notices to an outdated address, even when the assessee updated their details on the Income Tax Portal and Form 35, amounts to sufficient cause for condoning delay in filing appeals. This sets a critical precedent for taxpayers with mobility or health constraints, reinforcing that procedural fairness must override technical non-compliance when the tax department fails to use verified digital records.
The ITAT Delhi ruled that expenses incurred to sustain a Permanent Establishment after a business transfer cannot be disallowed under Section 28(i) merely due to the transfer-each cost must be evaluated for its direct nexus to ongoing business operations. This clarifies a critical loophole for multinational firms restructuring Indian operations, ensuring tax treatment aligns with economic substance rather than corporate form.
The ITAT Delhi has ruled that an educational institution qualifies for tax exemption under Section 12A(1)(ac)(ii) even without formal affiliation to a university or board, provided its objects and activities are exclusively educational and non-profit. This clarifies a critical ambiguity for small schools, nurseries, and alternative education trusts seeking tax status without institutional ties, reinforcing that substance overrides formality under the Income-tax Act.
ITAT Delhi upholds addition of Rs. 16.5 lakh as unexplained expenditure under Section 69C, ruling the assessee failed to discharge the burden of proving the legitimacy of purchases from a hawala operator. The judgment reinforces that mere book entries without corroborative evidence are insufficient to avoid tax additions.