Corporate International Financial Services Ltd Vs PCIT (central) (ITAT Delhi)
In a significant ruling pronounced on June 27, 2025, the Income Tax Appellate Tribunal (ITAT), Delhi Bench, has quashed multiple revisionary orders issued by the Principal Commissioner of Income Tax (PCIT) against Corporate International Financial Services Ltd. The ITAT’s decision, covering Assessment Years 2013-14 to 2019-20, establishes that the PCIT cannot invoke revisional jurisdiction under Section 263 of the Income Tax Act, 1961, to disallow interest on loans when the primary issue of the loan additions themselves is already pending before the Commissioner of Income Tax (Appeals) [CIT(A)].
The dispute originated from assessment proceedings for AY 2013-14, where the Assistant Commissioner of Income Tax (ACIT) had completed an assessment under Section 153A read with Section 143(3) of the Act. During this assessment, the ACIT treated unsecured loans received by Corporate International Financial Services Ltd. as unexplained cash credits under Section 68 of the Act, leading to a substantial addition of Rs. 10,40,00,000/-. Consequentially, a commission expenditure of Rs. 43,33,334/- was also added under Section 69C of the Act, on the premise that these loans were accommodation entries. The assessee, challenging these additions, subsequently filed an appeal before the CIT(A). The CIT(A), after reviewing the case, ultimately ruled in favor of the assessee, deleting the additions made under Section 68 and Section 69C. The CIT(A) specifically found that the assessee had successfully discharged its onus by proving the identity of the lenders, their creditworthiness, and the genuineness of the transactions, thereby concluding that the loans were not accommodation entries. This favorable order from the CIT(A) was passed on April 24, 2025.
