IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘A’ BENCH, NEW DELHI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA No. 7805/DEL/2019 [A.Y. 2016-17]

The A.C.I.T. Vs. M/s Sahara India Financial Central Circle – 1 Corporation Ltd Ward - 3(1) 1, Sahara India Bhawan New Delhi 1, Kapoorthala Complex, Aliganj, Lucknow PAN – AADCS 8698 C (Applicant) (Respondent)

Assessee By : Shri Aditya Vohra, Adv Shri Arpit Goel, CA Department By : Shri Kanv Bali, Sr. DR Date of Hearing : 21.12.2024 Date of Pronouncement : 02.01.2024

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. 9,15,34,8121-	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 trans

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