Case Law Details
Rhythm Polymers Pvt. Ltd. Vs PCIT (ITAT Delhi)
Introduction: The case of Rhythm Polymers Pvt. Ltd. vs. PCIT revolves around the applicability of Section 56(2)(vii)(b) of the Income Tax Act to companies for the assessment year 2015-16. The Principal Commissioner of Income Tax (PCIT) issued a revisionary order under Section 263 of the Income Tax Act, which the assessee company has appealed.
Detailed Analysis: Rhythm Polymers Pvt. Ltd. filed its income tax return for the assessment year 2015-16, and the case was selected for limited scrutiny under the Computer-Assisted Scrutiny Selection (CASS) system. The Assessing Officer (AO) conducted the assessment, accepting the declared income after examining the relevant details and documents.
However, the PCIT later initiated proceedings under Section 263 of the Income Tax Act. The PCIT raised concerns about the lack of investment details in property, a significant increase in sundry creditors, and the genuineness of the Fair Market Value (FMV) of a property. The PCIT found the assessment to be erroneous and prejudicial to the interest of revenue due to these issues.
The PCIT partially set aside the assessment order, directing the AO to examine the issue of property purchase for a consideration lower than the stamp value under Section 56(2)(vii)(b) of the Act.
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