Nagarajan Thiyagarajan Ganesh Vs DCIT (ITAT Chennai)
Chennai ITAT Deletes Addition for Luxury Car Purchase as Company’s Economic Ownership Prevails Over Registration in Director’s Name
The Chennai ITAT held that no addition could be made in the hands of a director merely because a luxury motor car was registered in his name, where the evidence established that the company had actually purchased the vehicle, capitalised it in its books, availed the loan, and bore the entire financial burden of acquisition and repayment. The Tribunal observed that economic ownership and source of investment are decisive factors, and mere registration in the assessee’s name does not establish unexplained investment or credit. Since the company had recorded the vehicle as its fixed asset, reflected the corresponding loan liability in its financial statements, and repaid the loan through its own bank account, the addition made by the Assessing Officer under section 68 (treated by the lower authorities as unexplained investment/expenditure arising from the vehicle purchase) was unsustainable. Accordingly, the Tribunal directed deletion of the entire addition of ₹51.01 lakh made in the assessee’s hands.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short “CIT(A)”) passed u/s. 250 of the Income Tax Act, 1961 (in short “the Act”) dated 26.11.2025 for Assessment Year (AY) 2020-21.
