This case analysis covers the appeal ITA 1173/DEL/2020 filed by JITF Urban Infrastructure Services Ltd, New Delhi, against the DCIT, Circle-13(2), New Delhi, for the assessment year 2017-18. The case was filed on June 15, 2020, and the final tribunal order was pronounced on September 28, 2020, by the Income Tax Appellate Tribunal, Delhi Bench ‘C’.
JITF Urban Infrastructure Services Ltd, a part of the Jindal Group, filed its return of income u/s 139(1) at a loss of Rs. 309,97,01,721/- for the AY 2017-18. During the assessment, the company faced additions made u/s 68 of the Income Tax Act for unsecured loans taken from two group companies, Glebe Trading Pvt. Ltd. and Danta Enterprises Pvt. Ltd. The Assessing Officer (AO) also disallowed the interest paid on these loans.
The appellant provided extensive evidence to prove the identity and creditworthiness of the lenders, including bank statements, audited financial statements, income tax returns, and loan sanction letters from reputed NBFCs. The Tribunal found that the lenders had substantial net worth and held significant investments in listed companies.
All loan transactions were conducted through proper banking channels. The loans were taken by pledging equity shares of group companies, which had substantial market value. The Tribunal confirmed the genuineness of these transactions based on the evidence provided.
The AO relied on a flawed enquiry report from the ADIT (Inv.), Raipur, which claimed the lenders did not exist at their registered office. The Tribunal dismissed this report due to inconsistencies and lack of proper enquiry.
The CIT(A) disallowed the interest on the loans, considering them unexplained cash credits. However, the Tribunal found that the loans were genuine and used for business purposes. The interest paid on these loans was allowed as a deduction.
The Tribunal’s order in ITA 1173/DEL/2020 was in favor of JITF Urban Infrastructure Services Ltd. The addition of Rs. 196,50,00,000/- u/s 68 for the loan taken and the disallowance of Rs. 11,03,15,540/- as interest were deleted. The case highlights the importance of providing comprehensive evidence to substantiate the identity, creditworthiness, and genuineness of loan transactions in income tax assessments.
This ruling sets a precedent for similar cases involving additions under Section 68 of the Income Tax Act. It underscores the necessity for the assessing officers to conduct thorough and accurate enquiries before making such additions. Additionally, it reaffirms the taxpayers’ right to provide evidence and cross-examine reports that question the legitimacy of their financial transactions.
Case Analysis of ITA 1173/DEL/2020: JITF Urban Infrastructure Services Ltd vs. DCIT, New Delhi
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