Case Law Details
ACIT Vs Dish Infra Services Pvt. Ltd. (ITAT Delhi)
The case of ACIT vs. Dish Infra Services Pvt. Ltd. revolves around several key issues raised by the Revenue against the order of the ld. CIT(A)-3, New Delhi dated 10.08.2020. The Revenue’s appeal addresses various aspects including unexplained cash credit, debenture issue expenditure, and disallowance of interest under section 36(1)(iii) of the Income Tax Act, 1961. Let’s delve into each of these matters as discussed in the full text of the order of ITAT Delhi.
Unexplained Cash Credit: During the relevant assessment year, the assessee received deposits and advances amounting to Rs. 705.05 Cr. for various purposes such as Dish installation, EPRS recharge collection, security deposits, and advances from Dish Care center. The Assessing Officer (AO) made an addition of Rs. 1.20 Cr. under section 68 of the Act due to non-submission of PAN and confirmation from the parties. The ld. CIT(A) partly deleted the addition, confirming Rs. 26.88 lacs, while deleting the rest. The ld. CIT(A) accepted advances from certain parties who could prove the validity of the advances and confirmed the amounts received from other parties who failed to prove the advances given. The Tribunal declined to interfere with the order of the ld. CIT(A) as it was based on factual verification.
Debenture Issue Expenditure: The issue of debenture issue expenses and their allowability stands settled by the order of the Hon’ble jurisdictional High Court in the case of Thirani Chemicals Ltd. The expenditure incurred on the issue of debentures was held to be permissible deduction, notwithstanding the introduction of Section 35D of the Income Tax Act. The ld. CIT(A) rightly deleted the addition made by the AO concerning e-stamp duty expenses paid towards non-convertible debentures issued by the assessee, based on the judgment of the jurisdictional High Court.
Disallowance of Interest u/s 36(1)(iii): The assessee incurred total interest expenses during the year, and the AO disallowed a proportionate interest charged on certain amounts under section 36(1)(iii) of the Act, stating they were not related to normal business activity. The ld. CIT(A) deleted the addition, holding that the assessee had sufficient own funds to make investments. The Tribunal upheld the decision of the ld. CIT(A), citing judgments of the Hon’ble Bombay High Court and the Hon’ble jurisdictional High Court to support the decision.
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