Topic
The ITAT Delhi handles appeals against income tax orders passed by the Commissioner of Income Tax (Appeals), interpreting provisions of the Income Tax Act, 1961 in disputes involving reassessments, disallowances, and procedural compliance.
ITAT Delhi clarifies that cash salary payments below Rs. 10,000 per day per employee do not attract disallowance under Section 40A(3), deleting a Rs. 21.6 crore addition. The ruling benefits businesses employing temporary staff on cash salaries, provided payments remain within the prescribed limit.
ITAT Delhi clarifies that Section 56(2)(viib) of the Income Tax Act operates on a receipt basis, not issuance basis. The tribunal upholds the Discounted Cash Flow (DCF) valuation method but limits tax additions to the excess premium over fair market value (FMV), providing relief to companies issuing shares post-2012-13.
The ITAT Delhi has ruled that an assessment under Section 153C cannot stand unless incriminating material directly belonging to the assessee is discovered during a search of a third party. This clarifies a critical jurisdictional limit on the tax department’s power to reassess unrelated taxpayers, reinforcing natural justice and statutory compliance in income tax proceedings.
The ITAT Delhi set aside a Rs. 35 lakh addition for unexplained cash deposits during demonetization because the reassessment under Section 147 lacked mandatory reasons and failed to secure prior approval under Section 151. Only Rs. 3 lakh was upheld after scrutiny, reinforcing that procedural compliance is non-negotiable in reassessments - a critical safeguard for taxpayers facing post-demonetization scrutiny.
The ITAT Delhi holds that the two-year limitation under Section 263 begins from the date of the original assessment order, not the subsequent reassessment, when the revision challenges errors inherent in the initial assessment. This clarifies a critical procedural trap for tax authorities and protects assessees from delayed revisionary attacks on stale assessments, directly impacting how revenue departments strategize revisionary proceedings.
ITAT Delhi clarifies that under Article 15 of the India-Australia DTAA, salary for services rendered abroad is taxable exclusively in the country where the services are performed, not in India. The ruling shields foreign-earned income of Indian residents from double taxation, reinforcing DTAA supremacy over domestic tax laws.
ITAT Delhi sets aside reassessment proceedings under Section 147 of the Income Tax Act, 1961, ruling that mere mechanical approval by the prescribed authority without independent application of mind renders the reopening invalid. The judgment reinforces procedural compliance as a safeguard against arbitrary tax reassessments, impacting taxpayers and tax authorities alike.
The ITAT Delhi has ruled that the Income Tax Department cannot reopen an assessment solely on the basis of unreported cash deposits if no addition is made against those deposits in the original assessment. This sets a critical precedent: mere non-filing of return coupled with large cash inflows is insufficient grounds for reopening - the revenue must demonstrate a tangible income addition. Taxpayers and practitioners now have clear protection against speculative reassessments based on deposit volume alone.
ITAT Delhi has ruled that foreign exchange gains arising from international transactions must be treated as operating income for transfer pricing purposes, and expense allocation must be calibrated using gross profit margins to determine the arm's length price. This sets a critical precedent for multinational enterprises using TNMM, forcing a reevaluation of how forex volatility and cost allocation impact their TP documentation and compliance strategy.
ITAT Delhi holds that the 10% tolerance limit under Section 50C of the Income Tax Act applies retrospectively, deleting a Rs. 4.47 lakh addition for a minor valuation discrepancy in property sales. The ruling clarifies that valuation differences within the tolerance limit cannot justify additions to capital gains, impacting taxpayers contesting stamp duty-based assessments.
ITAT Delhi rules that additions under Section 153C of the Income Tax Act require incriminating documents to explicitly mention the assessee. The tribunal set aside an addition of Rs. 15.37 lakh for lack of direct evidence linking the assessee to the alleged unexplained expenditure, reinforcing the evidentiary burden in search and seizure proceedings.
ITAT Delhi holds that adjustments under Section 143(1) of the Income Tax Act for late PF/ESI deposits under Section 36(1)(va) cannot be applied retrospectively for assessment years preceding the Checkmate Services ruling (2022). The tribunal quashed additions of Rs. 2.38 crore, reinforcing that tax disallowances must align with judicial precedents applicable to the relevant assessment year.
ITAT Delhi holds that reassessment proceedings under Section 147/148 of the Income Tax Act are vitiated if the approval under Section 151 is granted mechanically without independent application of mind. The ruling mandates that authorities must record reasoned approval, impacting all pending and future reassessment cases.
ITAT Delhi holds that failure to pay tax under the Income Declaration Scheme 2016 within the stipulated time renders the declaration invalid, making the disclosed income taxable in the year of declaration rather than the original assessment year. This ruling underscores the strict compliance requirement for availing amnesty benefits under the scheme.
ITAT Delhi quashes assessments for AY 2014-15 and 2015-16, ruling that satisfaction notes under Section 153C must be recorded within six assessment years to validate proceedings. The tribunal reaffirms the Delhi High Court’s holding in Ojjus Medicare, emphasizing strict procedural compliance to prevent time-barred assessments.