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Case Law Details

Case Name : PCIT Vs Clix Finance India Pvt. Ltd. (Delhi High Court)
Appeal Number : ITA 946/2019
Date of Judgement/Order : 02/11/2023
Related Assessment Year : 2010-11
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PCIT Vs Clix Finance India Pvt. Ltd. (Delhi High Court)

Delhi HC ruling on PCIT vs. Clix Finance: Examining tax implications of loan sale, addressing disallowance under Section 14A.

Introduction: The recent decision by the Delhi High Court in the case of Principal Commissioner of Income Tax (PCIT) vs. Clix Finance India Pvt. Ltd. has brought to light critical issues surrounding the treatment of losses on the sale of loans for income tax purposes. The court’s analysis delves into whether the Income Tax Appellate Tribunal (ITAT) was correct in law in deleting the addition of Rs. 103,87,99,712 corresponding to the loss on the sale of loans, specifically focusing on the nature of the right to receive money and its classification as a capital right.

Background: The case pertains to the Assessment Year 2010-11, with the appellant/revenue challenging the ITAT’s order dated 14.05.2019. The two primary questions of law raised were:

i. Whether the ITAT was correct in restricting the disallowance under section 14A of the Income Tax Act, read with Rule 8D, to Rs. 78,037, ignoring the rule that disallowance is not to be restricted to the extent of exempt income.

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