Appellant: Jindal ITF Ltd., New Delhi
Respondent: DCIT, Circle-13(2), New Delhi
Assessment Year: 2017-18
Case Filed On: 2020-06-15
Order Type: Final Tribunal Order
Date of Order: 2020-09-28
Pronounced On: 2020-09-28
This case involves the appeal by Jindal ITF Ltd. against the assessment made by the Deputy Commissioner of Income Tax (DCIT) for the assessment year 2017-18. The main issues in the appeal were related to the additions made under Section 68 of the Income Tax Act, 1961 concerning loans taken from group companies and the disallowance of interest paid on these loans.
The case was filed by Jindal ITF Ltd. on June 15, 2020, following an assessment by the DCIT, Circle-13(2), New Delhi. The assessment order, dated May 18, 2020, resulted in significant additions under Section 68 for unexplained cash credits in the form of loans taken from group companies Glebe Trading Pvt. Ltd. and Danta Enterprises Pvt. Ltd. Furthermore, interest paid on these loans was disallowed.
The appeals were consolidated and heard together as they involved common issues and similar facts across different group companies:
These companies challenged the additions made under Section 68 and the disallowance of interest on the grounds that the loans were genuine and supported by necessary documentation.
The Tribunal examined the documentation provided by the appellant, including confirmations from the lenders, bank statements, PAN and income tax returns of the lenders, audited financial statements, and other statutory filings. The Tribunal found that the identity and creditworthiness of the lenders, Glebe Trading Pvt. Ltd. and Danta Enterprises Pvt. Ltd., were established beyond doubt.
The lenders had significant investments in listed shares with substantial market value, and these shares were pledged as security to obtain loans from reputed NBFCs. The Tribunal noted that the loans were obtained by pledging these shares and were advanced to the appellant for business purposes.
The Tribunal also found that the transactions were genuine. The loans were taken through proper banking channels, and the necessary interest was paid and duly recorded. The Tribunal observed that the appellant had provided extensive evidence to prove the source of funds and the genuineness of the loan transactions.
The Tribunal concluded that the appellant had satisfactorily discharged its onus under Section 68 of the Income Tax Act. The identity and creditworthiness of the lenders and the genuineness of the transactions were established through documentary evidence. Consequently, the additions made by the DCIT under Section 68 were deleted.
Regarding the disallowance of interest, the Tribunal noted that since the loans were found to be genuine and used for business purposes, the interest paid on these loans was allowable as a deduction. The disallowance of interest was thus overturned.
The appeal was partly allowed, and the additions and disallowances made by the DCIT were deleted.
Order Pronounced by: Shri Amit Shukla, Judicial Member, and Dr. B.R.R. Kumar, Accountant Member
Date of Pronouncement: September 28, 2020
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