Case Law Details
Spandan Tradecom Private Limited Vs ITO (ITAT Kolkata)
Introduction: In a recent decision, the Income Tax Appellate Tribunal (ITAT) in Kolkata granted relief to Spandan Tradecom Private Limited, emphasizing that incorrect accounting and wrong grouping of investment holdings do not constitute a bogus investment. The case centered on an addition of Rs. 10.50 lakh by the Assessing Officer, which was subsequently confirmed by the Commissioner of Income Tax (Appeals). This article provides a detailed analysis of the case and its implications.
Detailed Analysis
1. Background: Spandan Tradecom Private Limited, a private limited company, declared an income of Rs. 66,510 in its e-return for the Assessment Year (AY) 2016-17. The case was selected for scrutiny, and during the assessment, the Assessing Officer noticed an amount of Rs. 10.50 lakh in the name of M/s. Kothari Containers Pvt. Ltd. on the asset side of Spandan Tradecom’s balance sheet.
2. Misclassification: The Assessing Officer inquired about the nature of this amount and received a response from M/s. Kothari Containers Pvt. Ltd., stating that it had issued 35,000 equity shares for Rs. 15 lakh in March 2012. The Assessing Officer concluded that the investment of Rs. 10.50 lakh was bogus and added it to Spandan Tradecom’s income.
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