JCIT (OSD) in charge of DCIT Vs Geopreneur Realty Private Limited (ITAT Mumbai)
Section 68 Addition Deleted: Intra-Group Loan Restructuring and Partner Account Reclassification Not Bogus Credits
The assessee, a real estate company, had originally borrowed from two NBFCs. During the year, its holding company (GCPL) took a fresh loan from another NBFC and directly repaid those NBFC dues on behalf of the assessee. As a result, the assessee’s old NBFC loans got replaced by a loan payable to its holding company through journal entries. Complete documentation was furnished, including lender confirmations, bank statements showing direct repayments, no-dues certificates from the original NBFCs, PAN, ITRs and financials of the holding company, and matching disclosures in both companies’ balance sheets.
The Tribunal held that this was a genuine restructuring of borrowings within the group, fully backed by verifiable documents, and not an accommodation entry. Identity and creditworthiness of the holding company and genuineness of the transaction stood proved, and no defect was found in the evidence. Therefore, deletion of the ₹15.85 crore addition under section 68 (made by the AO) was upheld.
On the second issue, the AO had added ₹10 lakh treating it as unexplained loan from a partnership firm. The Tribunal noted that there was only a reclassification of an existing advance/loan balance into the partner’s current account through journal entries, without any fresh cash inflow. Interest on the outstanding had suffered TDS and all movements were supported by audited books and ledgers. Hence, there was no new credit requiring explanation under section 68, and the deletion of this addition was also confirmed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
