DCIT, CENTRAL CIRCLE-8(1), MUMBAI, MUMBAI vs. JARANDESHWAR SUGAR MILLS PVT. LTD., PUNE
Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI OM PRAKASH KANT () & MS. KAVITHA RAJAGOPAL ()
PER BENCH
These appeals, preferred by the Revenue, arise from separate orders, passed by the Learned Commissioner of Income-tax
(Appeals)–50, Mumbai, [hereinafter referred to as “the Ld. CIT(A)”]
pertaining to Assessment Years 2016-17 to 2022-23 respectively. As the controversy involved stands upon a substantially common factual substratum a heard together and a for the sake of conven
2. At the very thresh for Assessment Year and the decision th remaining years. We for Assessment Year
3. Now we take up
2016-17. The Reven
CIT(A) and raised, i disallowance of leas accommodation entr unsecured loans, an executed by the les company. The groun under:
“1. Whether in CIT(A) had er the Survey ac
2. Whether in CIT(A) had er the Act in res on the basis o
3. Whether in CIT(A) had e
Jarandes
ITA Nos
6928/M and identical questions of law, th are being disposed of by this con nience and to avoid repetition of hold, both parties fairly agreed r 2016-17 may be treated as t herein shall apply mutatis m e accordingly proceed to adjudi
2016-17. p the appeal of the assessee for a nue has assailed the relief gran inter-alia, grounds challenging se-rent expenditure, the treatm ries, the conversion of outstan nd the implications of a Pow ssor in favour of directors of nds raised by the Revenue are n the circumstances of the case and in la rred in not taking into consideration the f ction conducted on the assessee; n the circumstances of the case and in la rred in deleting the disallowance made u/
spect of Rent expenses of Rs. 5,69,95,06
of the findings during Survey action.
n the circumstances of the case and in la rred in not appreciating that on the ba shwar Sugar Mills Pvt. Ltd.
2
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
he appeals were nsolidated order, f facts.
that the appeal the lead matter, mutandis to the icate the appeal assessment year nted by the Ld.
the deletion of ment of alleged nding rent into wer of Attorney f the assessee- e reproduced as aw, the Ld findings of aw, the Ld
/s 37(1) of 61/- made aw, the Ld asis of the statement on Vijay Jagdale company it w
Rs.26 crores converted to U
4. Whether in CIT(A) had er executed by t vide which p
Jarandeshwa over to the as business prud of Attorney th
Rs. 700 crores
5. Whether in CIT(A) had err
Guru Commod
Sakhar Kark expenses clai
Assessing Off
4. Briefly stated fa in manufacturing an income for the year total income of Rs Ni tax Act,1961( in sho the assessee in conn carried out at the pr
Assessing Officer iss consideration submis of the Act on 28/02
issued on 28/02/202
Jarandes
ITA Nos
6928/M oath u/s 131 of the Act dated 07/10/20
e, General Manager and Director of the was revealed that the outstanding leas payable to Guru Commodity Services
Unsecured Loans was an accommodation n the circumstances of the case and in la rred in not appreciating that the Power of the directors of Guru Commodity Service power to mortgage the property and pr ar Sahakari Sakhar Karkhana (JSSK) wa ssessee company was an act which wa dence and practice. On the basis of the s he assessee company availed loans to the s from DCCB, Pune; n the circumstances of the case and in la red in not appreciating that the assessee dity Services Pvt Ltd and Jarandeshwar khana were acting in connivance and h imed on account of Lease Rent disallow ficer were merely accommodation entries; acts of the case are that the asse d sale of Sugar. The assessee fi under consideration on 14/10/
il. Subsequently, a survey u/s 1
ort the Act) was carried out at nection with search action u/s emises of DB Realty group. Co sued notice u/s 148A and af ssion of the assessee issued ord
2/2023. Notice u/s 148 of th
23. The reassessment was comp shwar Sugar Mills Pvt. Ltd.
3
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
021 of Shri assessee se rent of s Pvt Ltd, n entry; aw, the Ld of Attorney es Pvt Ltd, remises of as handed as against aid Power e extent of aw, the Ld company, r Sahakari hence the wed by the ; essee is engaged iled its return of /2016 declaring
133A of income- the premises of 132 of the Act onsequently, the fter taking into der u/s 148A(d) he Act was also pleted by the AO on 4/05/2023, where taking the factory pre
4.1 The relevant fa reveals that during s factory premises—Ja noticed that the asse
M/s. Guru Commo earlier acquired the Karkhana (JSSK) in a State Co-operative appeared to the Asse
(a) the factory was acquisition by GCSPL
(b) part of the purch assessee;
(c) nominal rent was (d) rent payable over into unsecured loans
(e) GCSPL had execu the assessee to mo finance.
Jarandes
ITA Nos
6928/M ein he disallowed the lease rent emises on lease.
ctual matrix, as culled out by survey proceedings conducted a arandeshwar Sugar Factory, essee had taken the sugar factor dity Services Pvt. Ltd. (GCSP e assets of Jarandeshwar Sa a public auction conducted by t
Bank (MSCB) in F.Y. 2010
ssing Officer(AO) that:
s leased to the assessee imm
L; ase funds paid by GCSPL had charged initially; r several years was either unpa s; and uted a Power of Attorney enabl ortgage the leased property fo shwar Sugar Mills Pvt. Ltd.
4
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
expenditure for the Ld. CIT(A), at the assessee’s
Satara—it was ry on lease from PL), which had ahakari Sakhar he Maharashtra
-11. It further mediately upon flowed from the aid or converted ling directors of or raising bank
2 Basing on the arrangement as a “p branding GCSPL as a as a sham. For rea reproduced by ld CIT “35. The facts the assessme action at the Jarandeshar Maharashtra, said premises Ltd. (GCSPL). the assets of for Rs.65.75 C Co-operative B limited comp substantial a 20/09/2010, Realtors Pvt. L JSSK. Since business and company, in GCSPL had re from various (Rs.20.25 Cr assets of JSS given on leas only nominal the initial fiv factory is sti lease basis a GCSPL had Rajendra Gha Sinagare, Dir register the m for mortgaging company ha mortgaging th Moreover, from during post-s Jarandes ITA Nos 6928/M ese circumstances, the AO pre-designed” structure to benef a mere front and treating the r ady reference, relevant part of T(A) is extracted as under: s leading to the impugned addition, as re ent order, are that during the course of t factory premises of the appellant comp Sugar Factory, Koregaon, Bhatamwad it was found that the appellant had s on rent from M/s.Guru Commodity Ser It was further noticed that GCSPL had Jarandeshwar Sahakari Sakhar Karkha Cr. in an auction conducted by Maharas Bank (MSCB) in F.Y. 2010-11. GCSPL is pany incorporated on 30/11/2000 an activities till the F.Y. 2009-10. There the company was purchased by M/ Ltd. for participating in the auction of the then, GCSPL has not been carrying d is receiving only rental income from the respect of the factory premises given eceived funds for acquisition of the asset s entities, including the appellant r.). Further, immediately after acquisitio SK by GCSPL in auction, the factory prem se to the appellant company on 25/11/ annual charges of Rs.12 lakhs were ch ve years from the appellant company, ill being operated by the appellant com and the lease period is effective till 20 executed a Power of Attorney in favou adge (a relative of Shri Ajit Pawar) and S rectors of the appellant company, to exe mortgage deed and any other necessary d g the assets of JSSK, and thereafter, the ad availed huge loans from Pune D he property of JSSK, with the consent o m the details furnished by the appellant survey proceedings, it was noticed that shwar Sugar Mills Pvt. Ltd. 5 s. 6926, 6925, 6929, 6927, MUM/2024 & ITA No. 228, 231/MUM/2025 construed the fit the assessee, rent expenditure f factual matrix ecorded in the survey pany, i.e., di, Satara, taken the rvices Pvt. d acquired ana (JSSK) htra State s a private nd it had eafter, on /s. Omkar e assets of g on any appellant on lease. ts of JSSK company on of the mises was 2010 and harged for and the mpany on 044. Also, ur of Shri hri Sachin ecute and documents appellant DCCB by of GCSPL. t company t the total lease rent pa from F.Y. 201 but till 31/03 appellant. Fu payable (Rs.2 appellant in i during the cou company, it a appellant is t same were a MSCB. The fa the shares of related to Shr for purchasin prominent an MSCB at the of JSSK seem dummy comp undervalued p the auction co used by the a availing loans the appellant regularly by t 36. In view of of assessmen issued on 11 cause as to w account of disallowed, t appellant sub terms of a Le company with it was submi expansion of Government a situations, th amount. The a well as rent p Even where t appellant has basis of the le as expenditur appellant tha Jarandes ITA Nos 6928/M aid/payable to GCSPL by the appellant 14-15 to 2021-22 was approximately Rs. 3/2022, only Rs.21.04 Cr. had been pa urther, in F.Y. 2018-19, the major part o 26 Cr.) was converted into unsecured lo ts books of accounts. From the above fac urse of the survey at the premises of the appeared that GCSPL was merely a fron the de facto owner of the assets of JSSK acquired by GCSPL in the auction cond acts that M/s. Sparkling Soil Pvt. Ltd., wh f the appellant company and is a group ri Ajit Pawar, had paid the funds to the ng the assets of JSSK; that Shri Ajit Paw nd influential member of the Board of D relevant point of time and the auction of t ms to have been conducted in such a man pany (GCSPL) could purchase the asse price.; that ever since its acquisition by onducted by MSCB, the factory premise appellant company for generating revenu s from various banks; charging of nomin t company by GCSPL and non-payment o the appellant, also supported the above vi f the above finding of the survey, during t nt proceedings, vide notice u/s. 142(1) 1/03/2023, the AO asked the appellan why the expenditure claimed during th rent paid/payable to GCSPL should treating the expenditure as bogus. In bmitted before the AO that the rent is p eave and License Agreement entered in h GCSPL. Regarding non-payment of rent itted by the appellant that the same w f the Plant capacity, policy changes and COVID situations. Further, due to e rent payable to GCSPL was converted appellant further submitted that TDS on i payable to GCSPL had also duly been the full amount is not paid to the lessor, s booked the liability on account of re ease agreement in its books, the same is re u/s.37 of the Act. It was also submitt at the expenditure cannot be treated shwar Sugar Mills Pvt. Ltd. 6 s. 6926, 6925, 6929, 6927, MUM/2024 & ITA No. 228, 231/MUM/2025 t company 50.96 Cr., aid by the of the rent an by the cts noticed appellant nt and the K after the ducted by hich holds p company e assessee war was a irectors of the assets nner that a ets at an GCSPL in s is being ue and for nal rent to of the rent iew. the course of the Act t to show e year on d not be reply, the payable in nto by the regularly, was due to s by the the same d into loan interest as deducted. but if the ent on the allowable ted by the as bogus merely on the the liability. 37. The AO w appellant. He issued the s GCSPL on 25 (25/11/2010) properties of Leave and L GCSPL had r assets of JS showed that Pawar, being loans to JSSK was auctione GCSPL. Furth lease to the a since Shri Mo Smt. Neeta P shareholders ultimate bene also held the of Attorney in Ajit Pawar) an company, to other necessa also indicated Ajit Pawar. C case, the AO the sugar fac premises on l part of a pre- extend the ul the arrangem manoeuvre an from projectin unreal as the of the case apparent wa apparent. Ac acquisition of the said pro appellant com an intention t profits/incom Jarandes ITA Nos 6928/M e ground of non-payment or delay in pa was not satisfied by the above explanat e observed that pursuant to the auction, M ale certificate in respect of the sugar f 5/11/2010, and with effect from the s 0), the said factory premises, along w JSSK, was given on lease to the appel License Agreement dated 13/05/2011. received part of the funds for acquisiti SSK from the appellant company itse t the transactions were pre-arranged. an influential Board Member of MSCB, K. As the loan was not repaid by JSSK, its ed by MSCB and the property was purc her, on the same date, the property was appellant company by GCSPL. According ohan Patil (brother-in-law of Shri Ajit Pa Patil (sister of Shri Ajit Pawar) were the of the appellant company, Shri Ajit Pawa eficiary of the pre-arranged transactions view that the fact that GCSPL had given n favour of Shri Rajendra Ghadge (a relat nd Shri Sachin Sinagare, Directors of the execute and register the mortgage deed ary documents for mortgaging the assets d that the affairs of GCSPL were controlle Considering the facts and circumstanc concluded that the transactions of acq ctory in auction by GCSPL and taking of lease by the appellant company from GC -determined and pre-decided arrangeme ltimate benefit to the appellant company ment had been made in such a manner nd mask the true intent of the appellant ng to be the ultimate beneficiary and to p e real. However, from the facts and circu discussed above, it was established s not the real and what was real wa ccordingly, the AO held that the transa f the property by GCSPL in auction and operty immediately thereafter by GCSP mpany were sham transactions, entered to inflate expenses in the books so as to r me and evade taxes to that extent. Cons shwar Sugar Mills Pvt. Ltd. 7 s. 6926, 6925, 6929, 6927, MUM/2024 & ITA No. 228, 231/MUM/2025 ayment of tion of the MSCB had factory to same date with other llant, vide Besides, ion of the elf, which Shri Ajit had given s property chased by s given on to the AO, awar) and e ultimate ar was the s. The AO n a Power tive of Shri appellant d and any s of JSSK ed by Shri ces of the uisition of f the said CSPL were ent only to y. Further, r so as to t company project the umstances that the as not the actions of leasing of PL to the d into with reduce the sequently, the AO disallo of Rs.5,69,95 during the yea 4.3 The Ld. CIT(A), rejected the AO’s infe as under: 38. I find th made certain of acquisition leasing of th relevant poin under: i) GCSPL ha company, alo the same date respect of the showed that t ii) GCSPL had assets of JS showed that t iii)The ultimat Shri Ajit Paw MSCB, had repayment of MSCB and th the same dat appellant com Shri Ajit Pawa Ajit Pawar) an were the ultim iv) It was stra favour of Shr and Shri Sac to execute a necessary do this also indic Shri Ajit Pawa Jarandes ITA Nos 6928/M owed appellant’s claim of deduction of ex 5,061/- towards rent paid/payable t ar under consideration.” upon an exhaustive re-appraisa erences and deleted the disallow hat the AO has discussed various f n observations with regard to the tran n of the sugar factory in auction and t he premises to the appellant by GC nts noted by the AO can be summa ad leased the sugar factory to the ong with other properties of JSSK, with e e on which MSCB had issued the sale ce e sugar factory to GCSPL (on 25/11/201 there was a pre-decided and d received part of the funds for acquisit SSK from the appellant company itse the transactions were pre-arranged. te beneficiary of the pre-arranged transac war, who, being an influential Board M given loans to JSSK, but on accoun f the loan by JSSK, its property was auc e property was purchased by GCSPL. Ho te, GCSPL had given the property on lea mpany. Thus, the ultimate benefit was d ar through Shri Mohan Patil (brother-in-la nd Smt. Neeta Patil (sister of Shri Ajit Pa mate shareholders of the appellant compa ange that GCSPL had given a Power of A ri Rajendra Ghadge (a relative of Shri Aj hin Sinagare, Directors of the appellant and register the mortgage deed and a ocuments for mortgaging the assets of J cated that the affairs of GCSPL were con ar. shwar Sugar Mills Pvt. Ltd. 8 s. 6926, 6925, 6929, 6927, MUM/2024 & ITA No. 228, 231/MUM/2025 xpenditure to GCSPL al of the record, wance observing facts and nsactions thereafter CSPL. The arized as appellant effect from rtificate in 10), which tion of the elf, which ctions was Member of nt of non- ctioned by owever, on ase to the derived by aw of Shri war), who any. Attorney in Ajit Pawar) company, any other JSSK, and ntrolled by From the abo transactions the premises pre-determine ultimate benef GCSPL and a has also mad in this regard and decided i 39. The suga under the nam (JSSK). The s State Co-Oper the loans. Ac the sugar fac in the public Guru Commo assets. GCSP company imm company has said premises above-mentio company) are 40. The AO MSCB had is factory to GCS on lease to th happen only here that, the alone cannot non-genuine, facts/circums the appellant of sugar, whi entered into a dated 13/05/ 25/11/2010. decided at Rs time to time and GCSPL Agreement w rent payable during appella Jarandes ITA Nos 6928/M ove, it can be seen that according to th of acquisition of the sugar factory and to the appellant company by GCSPL were ed and pre-decided arrangement mad efit of Shri Ajit Pawar, who controlled the also held interest in the appellant compan de various observations regarding the tra d, in the assessment order. This issue is in the following paragraphs. ar factory in question was owned by me of ‘Jarandeshwar Sahakari Sakhar K aid entity (JSSK) was given loans by Ma rative Bank (MSCB), but it defaults in rep ccordingly, MSCB auctioned the assets ctory) of JSSK for recovering the loan am auction conducted by MSCB, another e odity Services Pvt Ltd. (GCSPL), acqui PL has leased out the sugar factory to the mediately after its acquisition, and the been carrying out its business operation s since then. It has to be noted here th ned three parties (JSSK, GCSPL & the e separate and independent entities. has stated that it cannot be a co-incid ssued the sale certificate in respect of SPL and the said company had given the he appellant company on the same date, a if the same was pre-decided. It may be m ere is nothing unusual or unlawful in it, be a reason to treat the transactions in qu in absence of any other cor stances/evidences. It is also important to t has used the leased premises for man ich is its business activity. The appellant a Lease Agreement / Leave and License A 5/2011 for leasing the premises with ef The rent amount as per the agreem s. 12,00,000/- per year, which was rev as per mutual discussion between the (i.e. lessor), for which Addendums to were entered into on various dates. The for each year, as furnished by the ate proceedings, are as follows: shwar Sugar Mills Pvt. Ltd. 9 s. 6926, 6925, 6929, 6927, MUM/2024 & ITA No. 228, 231/MUM/2025 he AO, the leasing of e part of a de for the e affairs of ny. The AO ansactions discussed an entity Karkhana’ aharashtra payment of (including mount, and entity, viz. ired these appellant appellant ns from the hat all the appellant dence that the sugar e premises and it can mentioned , and that uestion as rroborating o note that ufacturing t had also Agreement effect from ment was vised from appellant the Lease details of appellant
Sr.
Agreement
Agr
No.
Date
The appellant
Profit & Loss the day it has Before me, th expenses deb closing balanc
2010 to Septe
Jarandes
ITA Nos
6928/M reement Period
Fixed Rent Per
Year (Rs.) t has also been debiting the rent expens
Account on regular basis since inception s taken the factory premises on lease fro he appellant has furnished the details o bited to the Profit & Loss Account, rent ce at the end of each year for the period N ember, 2024. The relevant details are as u shwar Sugar Mills Pvt. Ltd.
10
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
Rent (Cane
Crushing Per
MT) ses to the n, i.e. from m GCSPL.
of the rent paid and November, under:
The above fac of Rs 58.42 c the rent expe
Lease Agreem
Jarandes
ITA Nos
6928/M cts show that the appellant has paid tota crores of rent. It is also not the case of th enses debited by the appellant are not a ment.
shwar Sugar Mills Pvt. Ltd.
11
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
al amount he AO that as per the 41. The AO received the f from the app shows that th
AO has also merely a fron of the factory
[Para 4.1(b)], of the funds question, as u
Sr. No.
Name of the 1
Omkar Devel
2
Shivalik Vent
3
Roha Infrastr
4
Shubham Inv
5
Chinar Finve
6
Jarendeshwa
It can be seen paid only an total purchas
Rs.65.75 Cr.
out to only consideration received by G not establishe appellant’s o entities. This justification o purchased th appellant and factory premi
Cr. made by t of the AO tha books of bot inference can
42 In the asse that the appe rent payable company and Jarandes
ITA Nos
6928/M has also referred to the fact that GC funds for purchase of the assets of JS pellant company, and, according to him, he transactions in question were pre-arra stated in the assessment order that GC nt and the appellant company is the de fa y premises. I find that in the assessm the AO has himself given the details of th utilized by GCSPL for purchase of the under:
e entity
Amoun lopers Pvt. Ltd.
23,00,0
tures Pvt. Ltd.
10,00,0
ructure
5,00,00
vestment & Finance Pvt. Ltd.
5,00,00
st Pvt. Ltd.
2,00,00
ar Sugar Mills Pvt. Ltd.
20,25,0
n from the above that the appellant com amount of Rs.20.25 Cr. to GCSPL, wh se consideration paid by the said comp
The amount paid by the appellant compa
30% (approximately) of the total n and the remaining 70% of the funds
GCSPL from various other entities. The AO ed that the remaining 70% of the funds own funds routed through the above-m s being the factual position, there on the part of the AO in holding that G he assets of JSSK as a front compan d that the appellant was the de facto ow ises. Further, as regards the payment of the appellant company to GCSPL, it is no at the same is not accounted for / record th the parties. Hence, in my view, no be drawn on this account.
essment order, the AO has also referred ellant company had not paid the rent regu amounting to Rs.26 Cr. had been conver d shown in its books as unsecured shwar Sugar Mills Pvt. Ltd.
12
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
CSPL had SSK partly this also anged. The CSPL was acto owner ment order he sources assets in nt (Rs.)
00,000
00,000
0,000
0,000
0,000
00,000
mpany had hereas the pany was any works purchase had been O has also were also mentioned was no CSPL had ny of the wner of the f Rs.20.25
ot the case ded in the o adverse to the fact ularly and rted by the loan from GCSPL. Howe paragraph, it debited the re also paid sub that the app amounting to appellant has mutual conse between both has also been appellant has paid/payable
In my view, n part of the re was convert circumstances
43. The AO h
GCSPL had g the appellant for mortgagin that no prude
Jarandes
ITA Nos
6928/M ever, from the details tabulated in the t can be seen that the appellant has ent expenses to the Profit & Loss Accoun bstantial amount towards rent to GCSPL ppellant company has converted rent o Rs.26 Cr. into loan account. How s submitted before me that this was d ent and an agreement was also ent h the companies in this regard, and the n paying/debiting interest on the said am s furnished the details of the interest de e to GCSPL in various years on the said lo
(Amo no adverse inference can be drawn merel ent remained payable and/or part of th ted into a loan, considering the f s of the appellant’s case discussed above has also given undue importance to the iven Power of Attorney in favour of the D t company to execute and register mortg ng the assets of the company. The AO h ent management would execute such a shwar Sugar Mills Pvt. Ltd.
13
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
preceding not only nt but has . It is true t payable wever, the done with tered into appellant mount. The ebited and oan :
ounts in Rs.) y because he liability facts and e.
e fact that Directors of gage deed has stated a Power of Attorney in fa in executing a appellant com insignificant.
can be drawn on the basis company to o premises. In t that the comp and the said appellant com business of m and other rel the details of by it from suc
Asst. Year
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
From the abov company had 12 to Rs. 809
from the finan into genuine and trading of substantial in Further, the a utilized for pu fact that the v only
Rs.2,6
469,65,93,00
established th assets of GCS
Jarandes
ITA Nos
6928/M avour of a third party. In fact, the action a Power of Attorney in favour of the Direc mpany only for mortgaging the leased
What is to be considered is whether an n that the transactions in question are no of the fact that GCSPL had allowed the obtain loans from banks by mortgaging t this regard, the appellant has submitted pany has taken the loans for business e loans were utilised for business purpose mpany is a genuine company, engage manufacturing, trading and distribution lated products. The appellant has also f the turnover of the company and the pro ch business in various years, as under:
Turnover (Rs.)
Profit before
Books of Acc
89,27,13,986
(7,62,422)
154,45,00,424
3,48,62,615
120,69,64,493
1,15,99,066
196,59,68,073
(5,74,70,652)
154,69,01,291
(1,84,16,696)
112,39,06,820
5,78,08,966
144,18,35,584
49,03,111
314,99,97,360
1,25,01,192
461,57,08,907
33,52,204
423,33,99,791
17,37,73,135
632,55,85,979
7,58,58,165
809,65,32,000
39,84,63,000
ve, it can be seen that the turnover of the d increased from Rs. 89,27,13,986/- in A 9,65,32,000/- in A.Y. 2022-23. Thus, it ncials of the appellant company that not and regular business activities of man of sugar and other products but there has ncrease in the scale of operations of the appellant has submitted that the loans urchasing fixed assets and this is eviden value of Gross Block of Assets in A.Y. 201
64,557/-, which has increased
00/- in A.Y. 2022-23. Thus, the appe hat the loans obtained by mortgaging t
SPL have been utilised by it for the purp shwar Sugar Mills Pvt. Ltd.
14
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
of GCSPL ctors of the assets is n inference ot genuine, appellant the leased before me expansion e only. The ed in the n of sugar furnished ofit earned e Tax as per counts (Rs.) e appellant
A.Y. 2011- is evident t only it is ufacturing also been company.
were also nt from the 11-12 was to Rs.
ellant has the leased pose of its business. The the assessme inference can ground that obtain loans f
44. Now, com
Pawar being
I find that in as to how Sh in question. H influential Bo which defaul assets of JSS by the AO tha of MSCB, the such a manne an undervalu by Shri Ajit factory premi
Pawar’s relat shareholders, had issued premises. The Ltd., which ha and is a grou part of the f
GCSPL. These
45. At the ou order, the AO discussion in theory of an GCSPL & the therein and h para 4.7, the of the sugar f
GCSPL to th determined a ultimate bene order, the AO a different con
46. Coming b nothing on mentioned ab
Jarandes
ITA Nos
6928/M ere is also no contrary finding given by ent order. Under the circumstances, no n be drawn in the case of the appella
GCSPL had allowed the appellant co from banks by mortgaging the leased prem ming to the allegation of the AO regarding the ultimate beneficiary of the entire arra the assessment order, the AO has not br hri Ajit Pawar has benefitted from the tra
He has mentioned that Shri Ajit Pawar, oard Member of MSCB, had given loan lted in repayment of the loan. Accord
SK were auctioned by MSCB. However, it at since Shri Ajit Pawar was still a Boar e auction of the assets of JSSK was con er that the same could be purchased by ued price. Further, GCSPL is a company
Pawar, and the said company had le ises to the appellant company, wherein tives (sister and brother-in- law) were th
, with effect from the same date on wh the sale certificate to GCSPL in respe e AO has also mentioned that Sparkling ad 99.50% shareholding in the appellant up company related to Shri Ajit Pawar, funds for purchase of the factory pre e allegations of the AO are discussed belo utset, it may be noted here that in the as O has made contrary observations. While the assessment order mainly revolved a arrangement involving three entities, v e appellant company, and Shri Ajit Paw his being the ultimate beneficiary thereof,
AO has come to the conclusion that the factory in auction and leasing of the pre he appellant company are nothing bu and pre-decided arrangement only to e efit to the assessee. However, in the as O has not made any detailed discussion a nclusion was arrived at by him finally.
ack to the first theory of the AO, I find th record to support the allegations. As bove, JSSK, GCSPL and the appellant com shwar Sugar Mills Pvt. Ltd.
15
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
the AO in o adverse ant on the mpany to mises.
g Shri Ajit angement, rought out ansactions being an n to JSSK, dingly, the is alleged rd Member nducted in GCSPL at controlled eased the n Shri Ajit e ultimate hich MSCB ect of the g Soil Pvt.
t company has paid emises by ow.
ssessment the initial around the viz. JSSK, war’s role finally, in e purchase emises by ut a pre- extend the ssessment as to why at there is s already mpany are three separat in the assess and JSSK de
MSCB auction regarding allo of the appella conducting th
JSSK could b may be stated an open and the AO has support there without any b
47. The next a Pawar and th appellant com auction, for th me, the det shareholders furnished. Th are as under:
Name of Director
Rajendra Shankarrao G
Sachin Sambhaji Sinag
Vaishali Hanmantrao G
Umesh Gautam Mane
Hanmantrao Gaikwad
Virdhaval Krishnarao J
Vikram Wagh
Vikas Vyankat Nipane
Hanmant Laxman Yad
Shahaji Ramadas Bha
Charudatta Narhar De
Shahaji Balasaheb Gai
Vijay Ramrao Jagdale
Similarly, the as follows:
Name of Director
Mukesh Javerilal B
Jawaharlal Bhanv
Jarandes
ITA Nos
6928/M te and independent entities. There is no d ment order as to how MSCB’s giving loan efaulting in repayment of the loan, re ning its assets can have any bearing on owability of the lease rent expenditure in ant company. As regards the allegation he auction in such a manner that the e purchased by GCSPL at an undervalue d that the assets had been purchased by public auction. Apart from making the a not pointed out any facts and circums eof. Accordingly, this allegation is fou basis.
allegation is that GCSPL was controlled b hat GCSPL had leased the factory premi mpany immediately after the same was a he benefit of Shri Ajit Pawar. In this rega tails of the current and past Direc of the appellant company and GCSPL h he details of the Directors of the appellant
Appointment Date
Cessati
Ghadge
10 August 2011
- gare
25 September 2020
-
Gaikwad
03 November 2010
14 Janu
03 November 2010
12 Janu
03 November 2010
12 Janu
Jagadale
11 April 2016
30 Augu
27 December 2010
10 Augu
27 December 2010
20 Augu dav
14 January 2011
20 Augu gat
30 September 2011
18 Octo eshpande
30 September 2011
30 Sept ikwad
26 September 2015
11 Apri
30 September 2016
21 June details of current and past Directors of G
Appointment Date
Cessation
Bagrecha
01 October 2010
- varlal Chhajed 03 November 2014
- shwar Sugar Mills Pvt. Ltd.
16
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
discussion n to JSSK; esulting in n the issue the hands n of MSCB assets of ed price, it y GCSPL in llegations, stances in und to be by Shri Ajit ises to the acquired in ard, before ctors and have been t company ion Date uary 2011
uary 2011
uary 2011
ust 2016
ust 2011
ust 2011
ust 2011
ober 2014
tember 2011
l 2016
e 2021
GCSPL are n Date
Ravindrakumar Bh
Rekha Padamchan
Kiran Jain
Sunil Kumar Rama
Mukesh Javerilal B
Further, the company as o
Sr. No.
Names of 1
Sparkling
Jay Agrot
2
Aarya Ag
3
Fire Powe
4
Non-Con E
5
Mr. Rajen
6
Mrs. Such Total
Similarly, th
31/03/2016
Sr. No.
Name o
1
Omkar
Total
It can be seen between both directors of bo even a single appellant com director nor a AO has state
Ajit Pawar a company. He a group com contentions of in question ca able to esta shareholders sought to est fact that GCS loans from ba
Jarandes
ITA Nos
6928/M hansali
30 November 2000
01 Octobe nd Pokhrana
07 September 2003 01 Octobe
07 September 2003 22 Octobe adhar Singh
30 September 2011 04 Novem
Bagrecha
01 October 2010
30 Septem details of the shareholders of the on 31/03/2016 are as follows:
f the Shareholders
No of Sh g Soil Pvt. Ltd. (Formerly known as tech Pvt. Ltd.)
1,00,00,0
gro Bio Herbal Pvt. Ltd.
20,000
er Marketing (I) Pvt. Ltd.
10,000
Energies Pvt. Ltd.
15,000
ndra Ghadge
4,990
hitra Ghadge
10
1,00,50,0
he details of shareholders of GCSPL are as under:
of Director
No of Sha
Realtors Pvt Ltd
65,250
65,250
n from the above that there is no connec h the companies, since the sharehol oth the companies are totally different, th common shareholder or director in GCSP mpany. Further, Shri Ajit Pawar has neith a shareholder in any of these two compa ed that relatives (sister and brother-in-la are the ultimate shareholders of the has also mentioned that Sparkling Soil P mpany related to Shri Ajit Pawar. Even f the AO are assumed to be true, the tra annot be treated as bogus, as the AO has ablish any relation between the Di of the appellant company and GCSPL. Th tablish such a relation merely by referr
SPL has allowed the appellant company anks by mortgaging the leased premises, shwar Sugar Mills Pvt. Ltd.
17
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
er 2010
er 2010
er 2010
mber 2014
mber 2011
appellant hares Held
000
000
PL as on ares Held ction at all lders and here is not PL and the her been a anies. The aw) of Shri appellant
Pvt. Ltd. is n if these ansactions s not been irectors /
he AO has ring to the y to obtain which, as already discu been found mortgaging t purpose of th and in the a shareholders this fact has transactions i is found to be 48. There is has been car factory premi of expenditur the leased pr year under c profit of Rs.5
claim of expe above that th this regard inference wit factory premi public auction
Cr. made by of the premise the companie appellant com
Lease Agreem loans obtaine leased premis business of t two compan circumstances transactions consequently, during the yea
49. Further, t entering into GCSPL have revenue to the a certain exp evaded taxes discussion in the appellant
Department.
Jarandes
ITA Nos
6928/M ussed herein above, is not sufficient. It ha that the loans obtained by the app the leased premises have been utilize he business of the company. In view of absence of any relation between the D of the two companies having been es s no bearing on the issue of genuinene in question. Accordingly, this allegation e not supported by any material on record no dispute to the fact that the appellant rrying on its business operations from t ises. Accordingly, the appellant claimed re towards lease rent paid/payable in remises. The turnover of the company d consideration is Rs.112,39,06,820/-, wit
5,78,08,966/-. However, according to th enses is bogus. I have already discuss e facts and circumstances referred to by alone are not sufficient to draw any th respect to the transactions in ques ises was purchased by GCSPL in an n conducted by MSCB. The payment of the appellant company to GCSPL before es by GCSPL is duly recorded in the boo es. The said premises has been lease mpany and the lease rent has been paid ment executed between the two compa ed by the appellant from banks by mortg ses have also been utilized for the purp the company. Further, no connection be nies has also been established. Li s, I see no justification for the AO in tre in question as sham transactio
, disallowing the lease rent expenditur ar at Rs.5,69,95,061/-.
the AO has also not been able to establis the transactions in question, the appe evaded taxes or the same has resulted e Department. Merely because an assess enditure, it cannot be said that the asse s or there is loss to the revenue. Th n the assessment order regarding tax e t and GCSPL and any loss of revenu
The appellant has submitted the detai shwar Sugar Mills Pvt. Ltd.
18
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
as already pellant by ed for the the same
Directors /
stablished, ess of the of the AO d.
t company the leased deduction respect of during the th a book he AO the sed herein the AO in y adverse stion. The open and f Rs.20.25
purchase ks of both ed to the d as per a anies. The gaging the ose of the tween the inder the eating the ons and, re claimed sh that by ellant and in loss of see claims essee has here is no vasion by ue to the ils of P&L accounts and GCSPL. On pe as well as Therefore, it i expenditure, a 50. Now, it is appellant is a incurred for th as deduction per the provis four condition eligible for de i.
Expend section ii.
Expend expend iii.
Expend expens iv.
Expend exclusi profess
Sub-section ( being expend and not being expenses of exclusively fo be allowed in "Profits and expenditure exclusively fo deduction u/s as discussed acquired the rentals are pa the appellan incurred for t allowable exp
51. In view paragraphs,
Rs.5,69,95,06
year under purpose of its Jarandes
ITA Nos
6928/M d computation of income of the appe erusal of the same it is observed that the the GCSPL has shown losses over t is not a case of suppression of income by as alleged by the A.O.
to be seen whether the expenditure claim allowable as business expenditure. Any he purpose of earning business income ar under section 30 to 37 of the I. T. Act, sions of section 37(1), it is clear that the ns need to be satisfied for any expen duction :
diture should not be of the nature des ns 30 to 36; diture should not be in the nature o diture; diture should not be in the nature of ses of the diture should be laid out or expended w ively for the purposes of the bus sion.
1) to section 37 states that any expend diture in the nature described in sections g in the nature of capital expenditure or the assessee), laid out or expended w or the purposes of the business or profes n computing the income chargeable under gains of business or profession". T must be laid out or expended wh or the purpose of business so as to be e s 37(1) of the Income Tax Act, 1961. In d above, it is evident that the appe business assets on lease and, hence, art and parcel of the business activities c nt. The expenditure is wholly and e the business purpose and, hence, the sa penditure u/s 37 of the I.T. Act.
w of the detailed discussion in the I hold that the rent expend
61/- claimed by the appellant company d consideration is allowable as incurred s business. Accordingly, the AO is directed shwar Sugar Mills Pvt. Ltd.
19
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
ellant and appellant the years.
y inflating med by the expenses re allowed
1961. As e following nse to be scribed in of capital f personal wholly and siness or diture (not s 30 to 36
r personal wholly and ssion shall r the head
Thus, the holly and eligible for this case, ellant has the lease carried by exclusively ame is an foregoing diture of during the d for the d to delete the disallowa taken by the a 4.4 The conclusions
(i) The acquisitio and all three e independent leg
(ii) The lease
Agreement, pe regularly debite
₹58.42 crores ov
(iii) Though the 30%) to GCSPL from independe that GCSPL was (iv) Conversion supported by m thereon, and th render the lease
(v) Execution of to mortgage leas for expansion,
Jarandes
ITA Nos
6928/M ance/addition of Rs.5,69,95,061/-. Grou appellant for A.Y. 2016-17 is ALLOWED.”
s of ld CIT(A), are summarised a on of assets by GCSPL was in a entities—JSSK, GCSPL and the gal persons.
was backed by a valid Leav riodically amended, and the d rent in its books and paid ren ver the years.
e assessee contributed ₹20.25
L’s purchase funds, the balance ent third parties; hence, the A s a “front” was factually untenab of unpaid rent into unsecu mutual agreements, the assesse his commercial arrangement, pe e sham.
f Power of Attorney merely enabl sed assets for availing business duly reflected in increased g shwar Sugar Mills Pvt. Ltd.
20
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
und No. 4
”
as under:
a public auction, e assessee—are ve and Licence assessee had nt aggregating to crores (approx.
e 70% emanated
AO’s conclusion ble.
ured loans was ee paid interest er se, could not led the assessee s loans—utilised gross block and turnover—which the genuineness
(vi) The AO faile
Shri Ajit Pawa detriment to th prove collusion
5. We have heard material available on this appeal. The con lease rent paid/paya
Services Pvt. Ltd. (“G lease and continuou activities.
5.1 The facts as bor
The sugar factory wa
Sakhar Karkhana (“J substantial borrowin
(“MSCB”). Conseque auction the assets o auction so conducted acquired the said fa leased the premises t
Jarandes
ITA Nos
6928/M h did not, absent contrary evide s of the lease.
ed to demonstrate how any alle ar translated into actual ben he Revenue, nor was any ma between the entities.
d the rival submissions, carefu n record, and considered the is ntroversy centers around the able by the assessee to M/s Gu
GCSPL”) in respect of a sugar f usly utilised for the assessee’s rne out from the record are larg as originally owned by Jarande
JSSK”), which had defaulted i ngs from Maharashtra State Co ent upon such default, MSCB of JSSK for recovery of its dues d, GCSPL emerged as the succes actory. Immediately upon acqu to the assessee, who has since shwar Sugar Mills Pvt. Ltd.
21
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
ence, undermine ged influence of nefit to him or terial placed to ully perused the ssues arising in disallowance of uru Commodity factory taken on manufacturing gely undisputed.
shwar Sahakari n repayment of -operative Bank
B proceeded to s. In the public ssful bidder and uisition, GCSPL then carried on bona fide commercia with the terms of th expenditure.
5.2 The Assessing premise that GCSPL and that the assess factory. On this foun sham, the rent pay expenditure claimed detailed and reasone of the impugned ord merit therein. Before could not controver findings so returned.
5.3 A careful readin theory is essentially t albeit without using t case, it was incum machinery of the Pro
We note, upon th undisputed—that p
Transactions Act w dismissed by the com
Jarandes
ITA Nos
6928/M al operations, paying lease ren he lease and claiming the same
Officer (“AO”), however, pro was merely a façade or “front”
see was in substance the rea ndation, the AO concluded that yments were merely a book d was not allowable. The learn d discussion contained in parag der, examined each allegation e us, the learned Departmental rt, by reference to any cogen ng of the assessment order revea that GCSPL acted as a ‘benami’
that precise expression. If indee mbent upon the Department ohibition of Benami Property Tr he assessee’s submission—w proceedings under the Ben were in fact initiated but w mpetent Appellate Authority. On shwar Sugar Mills Pvt. Ltd.
22
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
t in accordance e as a business oceeded on the of the assessee, al owner of the the lease was a device, and the ned CIT(A), in a graphs 38 to 51
n and found no l Representative nt material, the als that the AO’s of the assessee, d such were the to invoke the ransactions Act.
which remained nami
Property were ultimately nce proceedings under that special le authorities are preclu as the de-facto owne therefore, have proce without any support under the Benami emphasised that JS distinct and independ
5.4 The allegation determined and pre- circumstance that G immediately upon ac on the fact that the d of GCSPL coincides w of the appellant. In h a pre-conceived arra
The proximity of da presumption, particu establishing that the Commercial prudenc a functioning industr simultaneously neg continuity of busines
Jarandes
ITA Nos
6928/M egislation have been triggered, uded from independently brandi er of the asset in question. The eeded on the assumption of ben ting findings from the designa i Property Transactions Act
SSK, GCSPL and the appellan dent juridical entities.
that the lease arrangemen
-fabricated device is founded m
GCSPL leased out the premises cquisition. The AO places consi date of issuance of the sale cert with the date of execution of the his view, such coincidence is ips ngement. This contention is wh ates, by itself, cannot give rise ularly in the absence of any ta e transactions were colourable ce often dictates that a purchas rial undertaking, such as a sug otiate operational arrangeme ss. That circumstance cannot, w shwar Sugar Mills Pvt. Ltd.
23
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
the Income-tax ing the assessee e AO could not, nami ownership ated authorities
. It must be nt company are nt was a pre- merely upon the to the assessee derable reliance tificate in favour e lease in favour so facto proof of holly untenable.
e to an adverse angible material e or unnatural.
er who acquires gar factory, may nts to ensure without more, be treated as a badge o the AO rests upon as 5.5 The lease deed from 25.11.2010, s periodically revised t has, year after year, and has furnished outstanding and ren aggregates to ₹58.4
disputed that the ren the subsisting lease transaction.
5.6 The AO further
₹20.25 crores toward the factory, GCSPL
“front”, rendering the This reasoning is fact
5.7 The AO himself crores was funded p whose contributions
There is neither alleg entities were routed f
Jarandes
ITA Nos
6928/M of fraud. The inference sought ssumption and not evidence.
dated 13.05.2011, evidencing l ets out the rent payable, w through duly executed addenda debited lease rent in its Profit &
d complete particulars of re nt treated as loans. The cumu
42 crores. Significantly, the nt so debited is in accordance w e. These facts fortify the genu asserts that because the appell ds the pool of funds used by GCS must have acted merely as e appellant the de facto owner o tually unsustainable.
f records that the total consider predominantly by other indep constitute approximately 70% o gation nor evidence that contrib from the appellant. In such circ shwar Sugar Mills Pvt. Ltd.
24
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
to be drawn by lease with effect which has been a. The appellant
& Loss account, ent paid, rent ulative rent paid
AO has never with the terms of uineness of the lant contributed
SPL to purchase the appellant’s of the premises.
ration of ₹65.75
endent entities, of the total cost.
butions by those cumstances, the payment of ₹20.25 cr entities—cannot be c sham structure. Co money, deposit cont lessees for legitimat therefore baseless.
deflated, it was ope letting value in the h in the assessee’s han question its quantum
5.8 The AO also com crores were subsequ appellant has satisfa mutual agreement an paid. Conversion of t unusual in long-term identified any legal i
No adverse inference
5.9 The next circum granted by GCSPL t limited purpose of cr
This fact is wholly through audited acc
Jarandes
ITA Nos
6928/M rores—duly accounted for in th construed as evidence of benami ommercial transactions often tributions or financial particip te business reasons. The AO
If the AO believed that the n to the Department to exam hands of GCSPL; but having ac nds as a contractual payment, th m in the absence of any tangible mments upon the fact that ren uently converted into an unsec factorily demonstrated that thi nd that interest has been regula rade liability into loan is neithe m commercial arrangements. T infirmity in the accounting trea can hence be drawn.
mstance relied upon is the Pow to Directors of the appellant c reating a mortgage in favour of innocuous. The appellant has counts, that the loans so obta shwar Sugar Mills Pvt. Ltd.
25
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
he books of both i ownership or a involve earnest ation by future
O’s inference is lease rent was mine the annual ccepted the rent he AO could not evidence.
nt arrears of ₹26
cured loan. The is was done by arly debited and r prohibited nor
The AO has not atment adopted.
wer of Attorney ompany for the f lending banks.
s demonstrated, ained have been utilised for expansion exponential increase
₹809 crores in AY 20
assets from ₹2.64 la these facts. The mer raise operational fina lessor is controlled by 5.10 The AO furthe controlled by an in auction process wa allegation that he arrangements—rests any substantive factu a) that he influenc controlled by him;(c) ownership in GCSP directorial presence unsupported by an determination of the the auction process, of other regulatory or on the genuinenes expenditure under th
Jarandes
ITA Nos
6928/M n of manufacturing operations, in turnover—from ₹89 crores in 022-23—and the corresponding akhs to ₹469 crores. The AO d e facilitation by a lessor to ena ance does not even remotely s y the lessee or by any third part er adverted to allegations th nfluential political personality as stage-managed to favour was the “ultimate benefic wholly on conjecture and is u ual foundation. The AO has no ced the auction process;(b) t
) that he has any beneficial, l
PL; or (d) that he has any s in the appellant company. Su ny material, are wholly extr issue before us. If any improp the matter would fall squarely w r law-enforcement authorities; it s of the lease or the allow he Income-tax Act. The details o shwar Sugar Mills Pvt. Ltd.
26
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
reflected in the n AY 2011-12 to growth in fixed oes not dispute able its lessee to suggest that the ty.
hat MSCB was and that the GCSPL . The iary” of these unsupported by t demonstrated:
that GCSPL is legal or indirect shareholding or uch allegations, aneous to the priety existed in within the remit t has no bearing wability of the of Directors and shareholders of both is not even a single case of the Departme are benamidars of “ultimate beneficiary public figure hold sh without further evide commercial transacti auction process is cannot be sustained.
5.11 Upon an overall
AO’s inference of coll benefit to third partie upon legally admissi any shareholding, between the assesse trace any flow of c beyond the documen respective books. Th are substantial, gen financials.
5.12 The appellant h premises. Its busin
Jarandes
ITA Nos
6928/M companies, placed on record, common director or sharehold ent that the Directors or shareho the appellant company or y”. The mere fact that certain ares in the appellant’s parent co ence, taint an otherwise lawful a ion. The allegation that MSCB m similarly unsupported by any l conspectus of the record, it is lusion, pre-determined arrangem es rests upon conjecture and su ble evidence. There is no mater managerial, financial or pr ee and GCSPL. No attempt has consideration, overt or covert, nted commercial transactions re he appellant’s operations at the nuine and consistently reflec has been in continuous occupati ness operations are undisput shwar Sugar Mills Pvt. Ltd.
27
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
show that there er. It is not the olders of GCSPL of any alleged n relatives of a ompany cannot, and transparent manipulated the y evidence and evident that the ment, or indirect uspicion and not rial establishing roximate nexus s been made to between them ecorded in their e leased factory cted in audited ion of the leased ted. The lease arrangement is genui all transactions are No connection of de the appellant and GC circumstances, the A expenditure is fictitio
5.13 It is equally demonstrated that th loss of revenue. Both
There is not a whispe as a device to inflat
Suspicion, however s
5.14 In these circum be sustained. Sectio expenditure laid ou business. Lease re manufacturing activi has neither shown th colourable purpose.
proof, nor can unfou documented commer
Jarandes
ITA Nos
6928/M ine, the rent has been paid or p duly reflected in audited financ e-facto ownership—direct or ob
CSPL has been established by t
AO’s conclusion that the lease i ous is wholly unsustainable in la significant to note that the he arrangement has resulted in h entities have declared losses i er of evidence that the lease has te deductions or to suppress t strong, cannot take the place of p mstances, the disallowance of le on 37(1) of the Act permits de t wholly and exclusively for ent for premises used in ity is a quintessential business he expenditure to be capital nor
Suspicion, however strong, c unded conjectures displace the rcial transactions.
shwar Sugar Mills Pvt. Ltd.
28
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
provided for, and cial statements.
blique—between the AO. In such s sham and the aw.
e AO has not n tax evasion or in several years.
s been employed taxable income.
proof.
ase rent cannot eduction of any the purpose of the course of outlay. The AO established any annot supplant e legal effect of 5.15 In view of the c the allegations made any infirmity in the uphold the deletion o
5.16 The grounds rai
6. The grounds ra expenses are identic
17, therefore, followin to maintain consist mutatis mutandis in 7. In the result, all Order pronoun (KAVITHA RA
JUDICIAL M
Mumbai;
Dated: 24/11/2025
Rahul Sharma, Sr. P.S.
Jarandes
ITA Nos
6928/M complete failure of the Revenue in the assessment order, and in well-reasoned order of the lea of the disallowance of ₹5,69,95,0
ised by the Revenue are accordi aised in other appeals related al to ground raised in assessm ng our finding in assessment ye tency, the decisions in 2016
the grounds raised in other yea l the appeals of the Revenue are ced in the open Court on 24/ AJAGOPAL)
(OM PRAK
MEMBER
ACCOUNTA shwar Sugar Mills Pvt. Ltd.
29
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
to substantiate n the absence of arned CIT(A), we
061/-.
ngly dismissed.
to lease rental ment year 2016- ear 2016-17 and 6-17 is applied ars.
e dismissed.
11/2025. d/-
KASH KANT)
ANT MEMBER
Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
////
Jarandes
ITA Nos
6928/M ded to :
BY ORDER
(Assistant Re
ITAT, Mu shwar Sugar Mills Pvt. Ltd.
30
s. 6926, 6925, 6929, 6927,
MUM/2024 & ITA No. 228,
231/MUM/2025
R, gistrar) umbai