ACIT Vs Index Securities & Research Pvt. Ltd (ITAT Delhi)
Not an Entry Provider, Genuine NBFC Business Upheld: ITAT Dismisses Revenue Appeal on Commission and Bad Debt Addition
The Delhi ITAT dismissed the Revenue’s appeal and upheld the deletion of additions relating to alleged commission income and disallowance of bad debts in the case of an NBFC. The Assessing Officer had treated the assessee as an accommodation entry provider and estimated commission income at 2% of transactions, besides disallowing ₹2.75 crore claimed as bad debts. The CIT(A) deleted both additions after noting that the assessee was a registered NBFC, regularly carrying on lending and investment activities, earning substantial interest income over several years, and whose audited results and assessments had consistently been accepted in earlier and subsequent years.
The Tribunal observed that mere statements of directors or suspicion based on transaction patterns could not establish that the assessee was a paper company, particularly when real business activity, audited accounts, RBI registration and accepted assessments were on record. Relying on earlier Tribunal and High Court decisions in connected cases, it was held that the allegation of accommodation entry business was unsupported by any cogent incriminating material. On the bad debt issue, the Tribunal agreed that the assessee had furnished details of parties, PAN and addresses, and that once the debt was written off in the books, the deduction was allowable. Accordingly, the deletion of both additions was confirmed and the Revenue’s appeal was dismissed.
FULL TEXT OF THE ORDER OF ITAT DELHI
