Case Number: ITA 528/DEL/2019
Appellant: ACIT, Circle-6(1), New Delhi
Respondent: Clix Finance India P.Ltd (Earlier known as GE Capital Services India Ltd), New Delhi
Assessment Year: 2011-12
Result: 2011-12
Case Filed on: January 24, 2019
Order Type: Final Tribunal Order
Date of Order: July 19, 2023
Pronounced on: July 19, 2023
The case ITA 528/DEL/2019 involves the Assistant Commissioner of Income Tax (ACIT), Circle-6(1), New Delhi, as the appellant, and Clix Finance India P.Ltd, formerly known as GE Capital Services India Ltd, as the respondent. This case pertains to the assessment year 2011-12 and addresses the claim of loss on the sale of finance receivables. The appeal was filed on January 24, 2019, and the final order was pronounced on July 19, 2023.
The assessee, Clix Finance India P.Ltd, filed a return declaring a loss of Rs. 54,60,29,396/-. The case was selected for scrutiny, and the assessment order was passed under section 143(3) read with Section 144C of the Income Tax Act, 1961, assessing the loss at Rs. 30,93,58,600/-. The Assessing Officer (AO) disallowed the claim of loss on the sale of finance receivables amounting to Rs. 15,98,86,715/-. The assessee appealed against this disallowance before the Commissioner of Income Tax (Appeals) [CIT(A)], who deleted the addition. The Revenue then appealed against the CIT(A)’s order to the Income Tax Appellate Tribunal (ITAT).
The CIT(A) deleted the addition of Rs. 15,98,86,715/- made on account of the claim of loss on the sale of finance receivables. The CIT(A) relied on the order of the Co-ordinate Bench of the Tribunal in the case of the assessee’s group company, GE Money Financial Services Pvt. Ltd., for the assessment years 2002-03 to 2005-06. The CIT(A) concluded that the transaction was in line with the business practices of NBFCs (Non-Banking Financial Companies) and was permissible under RBI guidelines. The CIT(A) found that the assignment of finance receivables was completed during the subject year and was a commercial decision taken to minimize business loss.
The Departmental Representative argued that the CIT(A) erred in deleting the addition made by the AO. The Revenue contended that the transaction was not completed during the subject year and that the loss claimed was not final. The Revenue also suggested that the transaction was collusive in nature and designed to avoid tax.
The Assessee’s Representative argued that the CIT(A)’s decision was based on the findings of the Co-ordinate Bench in the case of GE Money Financial Services Pvt. Ltd., which was applicable to the current case. The Assessee’s Representative emphasized that the finance receivables were assigned without recourse, and the transaction was supported by strong commercial considerations. The Assessee also highlighted that the loss was incidental to the business and allowable under section 28 of the Income Tax Act.
The Tribunal reviewed the facts of the case and the submissions made by both parties. The Tribunal noted that the CIT(A) had relied on the decision of the Co-ordinate Bench in the case of GE Money Financial Services Pvt. Ltd. The Tribunal found that the CIT(A) had correctly concluded that the transaction was completed during the subject year and that the loss claimed was incidental to the business of the assessee. The Tribunal also noted that the Revenue did not provide any evidence to substantiate its claims of the transaction being collusive or designed to avoid tax.
The Tribunal upheld the decision of the CIT(A) and dismissed the appeal filed by the Revenue. The Tribunal found no merit in the grounds of appeal raised by the Revenue and concluded that the loss claimed by the assessee was allowable under the provisions of the Income Tax Act.
The appeal filed by the Revenue was dismissed, and the decision of the CIT(A) to delete the addition of Rs. 15,98,86,715/- was upheld. The Tribunal’s order emphasized that the transaction was completed during the subject year and was a legitimate business decision taken by the assessee.
Order pronounced in open court on July 19, 2023, by the members of the Tribunal:
[PRADIP KUMAR KEDIA]
ACCOUNTANT MEMBER
[YOGESH KUMAR U.S.]
JUDICIAL MEMBER
Copy forwarded to:
//By Order//
Assistant Registrar, ITAT, New Delhi
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