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2024 Supreme(Online)(ITAT) 1
INCOME TAX APPELLATE TRIBUNAL
Shri Saktijit Dey, CJ, Shri N.K. Billaiya, J
ACIT Central Circle- 1 New Delhi – Appellant
Versus
Sahara India Financial Corporation Ltd. Lucknow – Respondent
ITA 7805/DEL/2019
Shri Aditya Vohra, Adv; Shri Arpit Goel, CA; Shri Kanv Bali, Sr. DR
The Tribunal upheld the CIT(A)'s findings that no deductions were claimed under section 35AC and that the transactions were business-related, dismissing the Revenue's appeal.
Headnote:(A) Income-tax Act, 1961 - Section 35AC - Deduction claims - The Assessing Officer disallowed a claim of deduction amounting to Rs. 1,24,12,036/- due to lack of evidence, but the CIT(A) found no claim was made under this section - The CIT(A) also dismissed further additions related to interest income and disallowances under section 14A, affirming that no exempt income was claimed. (Paras 4, 9, 25, 27)
(B) Appeal - Revenue's appeal against CIT(A) findings - The Tribunal upheld the CIT(A)'s decisions, stating that the Assessing Officer failed to demonstrate any factual errors in the findings. (Paras 10, 19, 34)
Facts of the case:
The Revenue appealed against the CIT(A)'s order which deleted various additions made by the Assessing Officer, including disallowances under section 35AC and section 14A, and interest income adjustments. The CIT(A) found that the claims were either unsupported or incorrectly categorized.
Findings of Court:
The Tribunal upheld the CIT(A)'s findings, confirming that the Assessing Officer's additions were not justified based on the evidence presented.
Issues: The main issues included the validity of the deduction claims under section 35AC, the nature of transactions regarding loans and advances, and the applicability of section 14A.
Ratio Decidendi: The court ruled that the CIT(A) correctly determined that no deduction was claimed under section 35AC and that the transactions were business-related, not loans, thus no disallowance under section 14A was warranted.
Result: Appeal of the Revenue dismissed.
ORDER
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
This appeal by the Revenue is preferred against the order of the ld. CIT(A) – 23, New Delhi dated 12.07.2019 pertaining to A.Y. 2016-17.
2. The Revenue has raised as many as 6 grounds of appeal.
3. Ground No. 1 is of general in nature and needs no separate adjudication.
4. Ground No. 2 relates to the deletion of addition of Rs. 1,24,12,036/- on account of disallowance of claim of deduction u/s 35AC of the Income-tax Act, 1961 [the Act, for short].
5. While scrutinizing the return of income, the Assessing Officer noticed that the assessee has claimed deduction u/s 35AC of the Act amounting to Rs. 1,24,12,036/-. The Assessing Officer observed that the assessee has not brought on record details/necessary evidences for being eligible to claim such deduction. Therefore, the assessee was show caused to justify its claim of deduction.
6. The assessee filed detailed reply explaining the claim. But the reply of the assessee was simply dismissed by the Assessing Officer who made addition of Rs. 1,24,12,036/-.
7. The assessee carried the matter before the ld. CIT(A) and explained that no such claim of deduction has been made u/s 35AC of the Act. It was explained that the figure of Rs. 7,92,87,036/- consists of two figures, namely, provision no longer required on equity shares of Pipavav Defence & Offshore shares Rs. 6,68,75,000/- and provision no longer required on long term investments Rs. 1,24,12,036/-.
8. It was further explained that the amount of Rs. 1,24,12,036/- represented provisions made as per Prudential Norms Direction of RBI in earlier years which has been written back as the provision made on long term investment was as per the RBI guidelines and was never claimed as a deduction from the taxable income. Therefore, write back has not been offered to tax.
9. The ld. CIT(A), after verifying the facts, came to the conclusion that there is no claim of deduction u/s 35AC of the Act. Therefore, there is no question of any disallowance or addition.
10. Before us, the ld. DR could not bring any factual error or infirmity in the findings of the ld. CIT(A).
11. On appreciation of facts brought on record, we decline to interfere. Ground No. 2 is dismissed.
12. Ground No. 3 relates to the deletion of addition of Rs. 1,43,63,802/- being interest on loans and advances.
13. During the course of scrutiny assessment proceedings and referring to the following chart:
| Name | Opening Balance | Closing Balance | Interest Charge |
|---|---|---|---|
| Sahara India Commercial Corp. Ltd. | Rs. 13,84,89,156/- | NIL | NIL |
| Sahara India | Rs. 17,86,78,438/- | Rs. 9,15,34,812/- | NIL |
the Assessing Officer observed that the assessee has not shown interest income on the aforementioned loans and advances.
14. A show cause notice was issued to the assessee asking it to explain as to why interest @ 12% may not be imputed on the average of opening and closing loans outstanding against the aforementioned related parties.
15. The assessee filed detailed reply which did not find any favour with the Assessing Officer who proceeded by imputing interest @ 12% and made addition of Rs. 1,43,63,802/-.
16. When the matter was agitated before the ld. CIT(A), it was explained that the transactions mentioned in the chart are self explanatory and are business transactions entered into in normal course of business and are certainly not loans and advances.
17, After verifying the facts, the ld. CIT(A) was convinced with the nature of transactions resulting into outstanding balance under consideration were not loans. The ld. CIT(A) further observed that information contained in the said chart was supported by books of account and the Assessing Officer has not pointed out any defects in the books of account. The ld. CIT(A) further observed that the Assessing Officer further erred in making addition on an imaginary income which defies basic conception of “accrue or arise” and on proper appreciation of facts, the ld. CIT(A) deleted the impugned addition.
18. Before us, the ld. counsel for the assessee veheme
