WILLOWOOD CHEMICALS LTD.,KOLKATA vs. D.C.I.T., CIRCLE - 11(1), KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member ITA No.275 & 594 /KOL/2026 Assessment Year: 2013-14 &2015-16 Willowood Chemicals Ltd,................................................................................Appellant 4th Floor, Madgul Lounge, 23, Chetla Central Road, Alipore H.O, Kolkata- 700027, [PAN No. AAECS0957K] Vs. D.C.I.T, Circle – 11(1)............................…………..…………………....……….Respondent Aayakar Bhawan, P-7, Chowringhee Square, Kolkata- 700069 Appearances by: Avra Mazumder & Gaurav Gupta, A.R., appeared on behalf of the Appellant. Praveen Das Chowdhury, (Sr. D.R),appeared on behalf of the Respondent. Date of concluding the hearing : July 01, 2026 Date of pronouncing the order : August 14 ,2026 ORDER Per Pradip Kumar Choubey, Judicial Member: These are the appeal filed by the assessee is directed against the order dated 18.11.2025 of the National Faceless Appeal Centre (NFAC), passed under Section 143(3) of the Assessment Year 2013-14& 2015-16 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).

In both the appeals, the issues are common and similar one so taken up together for disposal by taking ITA No. 275/2026 as a lead case.

ITA No.275 & 594/ KOL/ 2026 Assessment Year- 2013-14 & 2015-16 products, filed its return of income for AY 2013-14 on 28/11/2013 declaring an income of Rs. 3,09,30,000/ The case was selected for scrutiny, and assessment u/s 143(3) resulted in the following additions:

 Capitalisation of professional fees – Rs. 25,00,000  Disallowance of employees’ PF contribution – Rs. 94,484  Addition u/s 68 on account of share capital and share premium – Rs. 5,00,00,000/-.  Addition u/s 68 on account of unsecured loans – Rs. 3,45,00,000/-In the result, the appeal has been allowed for statistical purpose. Aggrieved by the said order, assessee preferred appeal before the CIT(A) wherein appeal of the assessee has been partly allowed by giving relief of Rs. 5,00,00,000/- to the assessee with respect to the share capital and premium. Being aggrieved by and dissatisfied assessee preferred appeal before us as the CIT(A) has disallowed the appeal of the assessee on the issue of unsecured loans of Rs. 3,45,00,000/- and disallowance of professional fee of Rs. 25,00,000/- as capital expenditure although depreciation has been allowed on the said amount.

ITA No.275 & 594/ KOL/ 2026 Assessment Year- 2013-14 & 2015-16 allowed as full deduction u/s 37(1) of the Income Tax Act. The Ld. AR further submits that the Ld. CIT(A) failed to appreciate the assessee has duly discharge the onus cast upon u/s 68 of the Act by furnishing PAN confirmation, Bank statement and financial of the lenders. The Ld. AR further submits that bank statement of the assessee established this fact that loan has been repaid. The Ld. AR submits that the assessee in response to the query raised by the AO has submitted documentary evidences that established the identity, creditworthiness and genuineness of the transaction and moreover the loan has been repaid, hence, the order passed by the CIT(A) is liable to be set aside. The Ld. AR further submits that the assessee has paid services charges for designing and treating of new factory building that cannot be treated as a capital expenditure and it should be treated as Revenue expenditure.

Contrary to that the ld. DR supports the impugned order.

ITA No.275 & 594/ KOL/ 2026 Assessment Year- 2013-14 & 2015-16 to mention here that CIT(A) has upheld the addition of Rs. 25,00,000/- and Rs. 2,45,00,000-/- u/s 68. The ld. AR filed a voluminous paper book before us that contains:-

a) Ledger of the 8 lender parties in the books of the assessee and the bank statement of the assessee evidencing receipt of loan amount. (See page 192 of paperbook) b) TDS certificate evidencing tax deducted at source by the assessee on interest paid to lenders. (See page 217 of paperbook) c) Balance confirmation certificate received from lenders (See pg 247 of the paperbook) d) Verification of PAN of the lenders obtained from the Income Tax Departments website. (See page 209 of paperbook) e) Master data of the lenders obtained from MCA website. (See page 256 of paperbook)

4.1. We further find that assessee has paid service charges for designing and trading of new factor building. The assessee incurred this expenditure on account of designing new units of running business project. Invoices have been filed by the assessee which is at page 190 of the paperbook. The submission of the AR is that it is a Revenue expenditure and not capital expenditure. Going over the relevant invoice which has been filed by the assessee, we find 4

ITA No.275 & 594/ KOL/ 2026 Assessment Year- 2013-14 & 2015-16 substance in the submission of the AR is that it is the Revenue expenditure and it should be allowed as a deduction u/s 37 of the IT Act.

4.2. The next issue with regard to the disallowance of unsecured loan. Looking at the paperbook, we find that during the financial year 2012-13, assessee has obtained unsecured loan to meet its working capital requirements and during the same financial year the above unsecured loans were partly repaid. Assessee has given a chart of taken unsecured loan and the repayment which are as belows:-

Bikaner Porcelain Pvt Ltd 1,00,00,000 Dakalia Brothers (P) Ltd 25,00,000 Multicoats Surfaces Pvt Ltd 20,00,000 NillampathyTracon Pvt Ltd 25,00,000 Silverlake Merchants Pvt Ltd 25,00,000 MeghdootCommotrade Pvt Ltd 1,50,00.000 Shree Madan Mohan Procon Pvt Ltd 50,00,000 Woodside Fashions Ltd. 50,,00,000

ITA No.275 & 594/ KOL/ 2026 Assessment Year- 2013-14 & 2015-16 Total 4,45,00,000/-

Bikaner Procelain Pvt Ltd 1,00,00,000 Dakalia Brothers (P) Ltd 25,00,000 Multicoats Surfaces Pvt Ltd 20,00,000 NillampathyTracon Pvt Ltd 25,00,000 Silverlake Merchants Pvt Ltd 25,00,000 MeghdootCommotrade Pvt Ltd 75,00,000 Woodside Fashions Ltd 25,00,000 Total 2,95,00,000

MeghdootCommotrade Pvt Ltd 75,00,000 Shree Madan Mohan Procon Pvt Ltd 50,00,000 Woodside Fashions Ltd 25,00,000 Total 1,50,00,000

ITA No.275 & 594/ KOL/ 2026 Assessment Year- 2013-14 & 2015-16 4.3. The assessee has also repaid the loan outstanding to the credit of MeghdootCommotrade Pvt Ltd and Woodside Fashions Ltd and the particulars for such repayment are as under:-

Name of lender Amount outstanding Date of repayment MeghdootCommotrade 75,00,000/- 31/1/2015 Pvt Ltd Woodside Fashions Ltd 25,00,000 12/8/2015

4.4. It is pertinent to mention here that during the relevant financial year 2012-13 the assessee has made provisions/payment of interest of Rs. 34,57,946/- to the 8 lenders and the assessee has duly deducted tax at source and furnish TDS certificate for the same. Unsecured loans were taken through account pages and credit entries of the said loans are duly reflected in the bank statement of the assessee. Net worth of the eight lender companies as submitted by the AR as below that goes to established that lender companies have sufficient net worth to justify the loan advanced by them:-

Name of lender Share Capital Reserves & Net worth Surplus Bikaner Porcelain Pvt 19,97,500 1,05,67,955 1,25,65,455

ITA No.275 & 594/ KOL/ 2026 Assessment Year- 2013-14 & 2015-16 Ltd Dakalia Brothers (P) Ltd 15,65,000 1,48,39,239 1,64,04,239 Multicoats Surfaces Pvt 97,39,529 1,22,39,529 Ltd 25,00,000 NillampathyTracon Pvt 3,46,20,000 7,85,88,664 11,32,08,664 ltd Silverlake Merchants 93,87,000 64,41,200 1,58,28,200 Pvt Ltd MeghdootCommotrade 6,00,000 97,81,726 1,03,81,726 Pvt Ltd Shree Madam Mohan 25,00,00 25,00,000 5,93,50,828 Procon Pvt Ltd Woodside Fashions Ltd 2,25,00,010 2,25,00,010 54,92,41,205

4.5. Now, we have gone through the judgment passed by the Kolkata High Court:-

(i) ITAT/2/2024, IA No: GA/1/2024: PRINCIPAL COMMISSIONER OF INCOME TAX-13, KOLKATA VS. PARWATI LAKH UDYOG (ii) ITAT/28/2024: IA NO: GA/2/2024: PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL 1 KOLKATA VS M/S EDMOND FIVEST PVT LTD 8

ITA No.275 & 594/ KOL/ 2026 Assessment Year- 2013-14 & 2015-16 (iii) ITAT/268/2024: IA NO: GA/1/2024, GA/2/2024: PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL-2, KOLKATA VS ALOM EXTRUSIONS LTD.

4.6. In all the aforesaid citation we find that Hon’ble High Court has dismissed the appeal of the revenue by observing thus-“As could be seen from the order passed by the tribunal has examined the factual details after noting the factual findings recorded by the CIT(A), more importantly, the learned tribunal found that all the loans stood repaid”.We have gone through the judgment passed by the Kolkata High Court in PCIT Vs Parwati Lakh Udyog and it is essential to reproduce the finding-

“The Court We have heard Mr. Prithu Dudhoria, learned standing Counsel appearing for the appellant and Mr. Saurabh Bagaria, learned Counsel for the respondent/assessee

This appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 (the Act) is directed against the order dated 26th July, 2023 passed by the Income Tax Appellate Tribunal, 'C' Bench, Kolkata in LT.A No. 44/Kol/2021, for the assessment year 2013-14

The revenue has raised the following substantial questions of law for consideration.

ITA No.275 & 594/ KOL/ 2026 Assessment Year- 2013-14 & 2015-16 a] Whether on the facts and in the circumstances of the case the Learned Income Tax Appellate Tribunal was justified in law, in not considering the direct and circumstantial evidences got on record by the assessing officer to establish that the assessee had indulged in accommodation entry in the guise of unsecured loan to the tune of Rs.4,99,50,000/- with a view to plough back its unaccounted money without paying legitimate tax on it?

b] Whether on the facts and in the circumstances of the case the Learned Income Tax Appellate Tribunal was justified in law in not considering the direct and circumstantial evidences got on record by the assessing officer to establish that the assessee had indulged in accommodation entry in the guise of interest to the tune of Rs.52,14,990/ accrued on unsecured loan to the tune of Rs. 4,99,50,000/- with a view to plough back its unaccounted money without paying legitimate tax on it ?

After we have elaborately heard the learned Advocates for the parties and carefully perused the materials on record, we find no question, much less substantial questions of law, arises for consideration in this appeal. That because of the reasons assailed by the Tribunal in the impugned order, more particularly in paragraph 9 of the order, in that learned Tribunal after re-appreciating the factual position found that the Assessing Officer has not indicated any discrepancy in any of the details 10

ITA No.275 & 594/ KOL/ 2026 Assessment Year- 2013-14 & 2015-16 furnished by the assessee, such as, financial statements, bank account statements, the PAN number and income tax details. Further, the learned Tribunal noted that the Commissioner of Income Tax (Appeals) [CIT(A)] has also examined each of the cash creditors in detail including the cases where advance of fund were made for the assessee in the preceding year. Further, it has been noted that interests have been paid through banking channels and taxes have been deducted at source. Therefore, the learned Tribunal concluded on facts that the Assessing Officer failed to bring any adverse material against the assessee and the loans borrowed by them. Furthermore, most of the unsecured loans have been repaid during the subsequent period.

Thus, we find there is no question of law, much less substantial question of law, arising for consideration in this appeal.

Accordingly, the appeal fails and is dismissed.

ITA No.275 & 594/ KOL/ 2026 Assessment Year- 2013-14 & 2015-16 6. Since the issue in ITA No 594/2026 and in the aforesaid appeal are the same hence the findings given in the above appeal shall apply as mutatis mutandis.

In the result both the appeal of the assessee are allowed.

Kolkata, the 14th August , 2026.

Sd/- Sd/-

[Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member

DC Dated: 14.08.2026.

Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

ITA No.275 & 594/ KOL/ 2026 Assessment Year- 2013-14 & 2015-16 //True copy// By order Deputy, Registrar, Kolkata Benches