Case Law Details
ACIT Vs Ambika Enterprises (ITAT Delhi)
In the legal case between ACIT (Assistant Commissioner of Income Tax) and Ambika Enterprises, ITAT Delhi provided insights into capital contributions made by partners in a firm. The focus is on whether any addition under section 68 could be made in the hands of the firm for capital contributions by the partners. A capital amount of Rs. 2,68,50,000/- was in question, with concerns around its sourcing and genuineness. The case verdict has implications for how capital contributions are evaluated within the context of taxation.
The case revolves around capital introduced by partners in their capital accounts. Observations were made by the AO (Assessing Officer) regarding capital introduced by Sh. Jitender Kharbanda and Sh. Mohan Lal Kharbanda. Questions arose regarding the routing of funds from M/s Seven Heaven Landcon Pvt. Ltd. and M/s Ambika Buildmart Pvt. Ltd. to M/s Ambika Enterprises.
The main contention was whether the appellant firm could prove the genuineness and creditworthiness of the source of share capital as per provisions of section 68. The AO made an addition in the taxable income on account of the capital introduced, which was challenged.
Various legal precedents were cited by both parties. The decision of the Ld. CIT(A) emphasized that the appellant had discharged its initial onus and that the responsibility to explain the funds’ nature lies with the partners.
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