IN THE INCOMETAXAPPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER and SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER (Assessment Year : 2007-08)

ACIT, Circle 25 (1), vs. Vipul Limited, Delhi. Vipul Tech Square, Sector 43, Gurgaon – 122 009 (Haryana)

(PAN : AAACA5396C)

CO No.80/Del/2023 (in ITA No.2047/Del/2021)

(Assessment Year : 2007-08)

Vipul Limited, vs. ACIT, Circle 25 (1), Vipul Tech Square, Sector 43, Delhi.

Gurgaon – 122 009 (Haryana).

(PAN : AAACA5396C)

ASSESSEE BY : Shri Sidharth Arora, Advocate REVENUE BY : Ms. Baljeet Kaur, CIT DR Date of Hearing : 22.01.2025 Date of Order : 22.01.2025

O R D E R

PER S. RIFAUR RAHMAN, AM :

1. This appeal has been filed by the Revenue against the order of ld. Commissioner of Income-tax (Appeals)-28, New Delhi (hereinafter referred to as ‘ld. CIT(A)’) dated 14.07.2020 for the Assessment Year 2007-08. The Objector, M/s. Vipul Ltd., by filing the present cross objections challenged the order dated 14.07.2020 passed by the ld. CIT (A) qua the AY 2007-08 raising jurisdictional and technical issue.

2. Brief facts of the case are, assessee filed its return of income for AY 2007-08 declaring an income of Rs.67,58,29,846/- on 31.10.2007. Subsequently, assessee revised its return of income on 10.12.2008 declaring total income of Rs.71,13,29,746/-. The assessment was completed under section 143 (3) of the Income-tax Act, 1961 (for short ‘the Act’) determining total income at Rs.75,86,98,436/-. Subsequently, the case was reopened u/s 147 of the Act by issue of notice u/s 148 of the Act on 31.03.2014 along with copy of reasons. The notices u/s 143(2) and 142(1) of the Act are issued and served on the assessee. In response, ld. AR of the assessee attended and submitted the information as called for.

3. In response, assessee submitted vide letter stating that final assessment order after appeal effect may be treated as return filed in response to notice u/s 147/148 of the Act. During assessment proceedings, Assessing Officer observed from the audited financial statements for the year ended 31.03.2007 that the assessee has taken secured loans from banks and balance outstanding and interest payment of Rs.4,38,00,487/- claimed in the Profit & Loss account. He observed that assessee has made investment during the year amounting to Rs.450,25,06,418/- on which no income has been derived or earned by the assessee. Based on the above information, the Assessing Officer analysed the investments made by the assessee, made interest free loans and advances made to related concerns. Assessing Officer has reproduced the interest free advances given to inter- corporate parties within the same management and the statement is reproduced at pages 2 & 3 of the order for the details of loans and advances amounting to Rs.177,17,79,293/-. After analysing the facts on record and relying on the decision of Ahmedabad Bench of ITAT in the case of S. Iraqki vs. Addl. CIT in which it was observed that when there is a mixed funds or used for the purpose of giving interest free advances, the only relevant test is as to whether such interest free advances are due to commercial expediency or not. After analysing the facts in this case, he came to the conclusion that assessee has used its borrowed funds to invest in the shares of its sister concerns by purchasing shares at a higher premium. Accordingly, he disallowed the interest claim of Rs.48,00,448/-.

4. Aggrieved with the above order, assessee preferred an appeal before the ld.

CIT(A) and filed the detailed submissions which is reproduced at pages 2 to 3 of the appellate order and also filed additional evidences in support of its submissions. Ld. CIT (A) remanded the additional evidences to Assessing Officer. After considering the additional evidences, Assessing Officer submitted the remand report dated 17.03.2017 which also reproduced at pages 35 to 38 of the appellate order. The assessee also filed a rejoinder to the remand report and the same was r