This case review focuses on the Income Tax Appellate Tribunal’s decision in ITA No. 5254/DEL/2019 for the assessment year 2013-14, involving the appellant ACIT, Circle 27(1), New Delhi, and the respondent Unitech Holdings Ltd.
The crux of the dispute lies in the assessing officer’s decision to impute interest on outstanding share application money amounting to Rs. 130,09,26,212, which had not been allotted within 60 days, deeming this delay unreasonable. The assessing officer calculated an interest of 14% on the sum, leading to an addition of Rs. 18,21,29,670 to the income.
At the tribunal, despite the absence of the assessee’s representation, the appeal proceeded based on the department’s presentation and records. The tribunal noted that similar additions had been deleted in prior years for both the assessee and its holding company, Unitech Ltd., in related tribunal decisions. Acknowledging these precedents, the tribunal upheld the deletion of the addition by the first appellate authority, affirming that the addition was merely notional and lacked substantive grounds.
Another issue discussed was the disallowance of expenses of Rs. 17,31,561 under Section 14A, which the tribunal also dismissed, reiterating that no exempt income was earned during the year, rendering Section 14A inapplicable.
The tribunal’s decision in this case reaffirms the judicial approach towards notional income and expenses based on established precedents, providing clarity and consistency in the treatment of share application money. This outcome not only impacts Unitech Holdings Ltd. but also sets a significant precedent for similar cases in the corporate and financial sectors.
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