DCIT Vs Jyoti Structures Limited (ITAT Mumbai)
The revenue appealed against the decision of the CIT(A) dated 09/05/2025 for Assessment Year 2007–08. The additions disputed by the revenue included disallowance of VAT input credit, estimated commission on alleged accommodation entries, and notional interest on advances. The revenue argued that the CIT(A) erred in deleting VAT-related additions, reducing the estimated commission expenditure, and removing the notional interest adjustment.
A search was conducted on the assessee and its group on 26/07/2011, followed by issuance of notice under Section 153A. The assessee filed a return declaring income of Rs. 1,29,75,48,528/-, while the Assessing Officer assessed income at Rs. 1,31,26,44,040/-. The additions included disallowance of VAT credit amounting to Rs. 96,21,568/-, commission expenditure of Rs. 48,10,940/- on alleged bogus purchases, and notional interest of Rs. 6,63,300/- on advances to Akruti Metals and Alloys Pvt. Ltd.
Before the CIT(A), the assessee contended that VAT input credit was neither claimed as an expenditure nor used in a manner that reduced taxable income, as VAT credit was only reflected in the balance sheet as a current asset. On the commission issue, the assessee argued that the AO presumed commission payment only because purchases were treated as accommodation entries. Regarding notional interest, the assessee submitted that the advance was given pursuant to a purchase order and was refunded when the transaction was cancelled.
