M/S JET LITE (INDIA) LTD.,NEW DELHI vs. DCIT, NEW DELHI

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ITA 2084/DEL/2011Status: DisposedITAT Delhi05 June 2026AY 2005-0610 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The tribunal partly allowed the appeal. It upheld disallowances for foreign currency fluctuation loss, accrued interest income, unsupported expenditure, gratuity provision, and taxes paid. However, it allowed deletions or reductions for business promotion expenses, LC charges, and software development expenses.

What were the facts?

The assessee company appealed against additions and disallowances made by the lower authorities. The appeal was heard ex-parte as the assessee's representative did not appear. The tribunal dealt with various grounds related to business promotion expenses, LC charges, software development expenses, foreign currency fluctuation loss, accrued interest income, and others.

What were the issues?

The key issues involved the allowability of various business expenses, including business promotion, LC charges, and software development, as well as the treatment of foreign currency fluctuation loss and accrued interest income.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 43B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: “F” NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWAL

For Respondent: Ms. Monika Singh, CIT DR
Hearing: 16.03.2026Pronounced: 05.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: “F” NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 2084/Del/2011 Assessment Years: 2005-06 Vs. Deputy M/s Jet Lite (India) Limited Commissioner of Jetair House, 13, Income Tax Community Centre, Yusuf Central Circle-6 Sarai, New Delhi- 49 New Delhi PAN: AADCS4480L (Appellant) (Respondent) Assessee by None Department by Ms. Monika Singh, CIT DR Date of hearing 16.03.2026 Date of pronouncement 05.06.2026 ORDER This assessee’s appeal ITA No. 2084/Del/2011, for assessment years 2005-06, arise against the Commissioner of Income Tax (Appeals-I) [in short, “CIT(A)”], New Delhi’s orders dated 28.02.2011, passed in Order No. 66/09-10, involving proceedings u/s 143(3) r.w.s. 142(2A) of the Income Tax Act, 1961; hereinafter referred to as ‘the Act’.

Case called twice. None appears at the assessee’s behest. It is accordingly proceeded ex-parte.

ITA No. 2084/Del/2011 Assessee’s appeal ITA No. 2084/Del/2011; A.Y.: 2005-06

2.

The assessee pleads the following substantive grounds in the instant appeals: “Ground No. 1: The L.d. Commissioner of Income Tax (Appeals) - I, New Delhi (hereinafter referred to as 'Ld. CIT(A)'), has erred in law and on the facts and in the circumstances of the case in upholding the various additions / disallowances made in the Assessment Oder dated 22.07.2008.

Ground No. 2: The Ld. CIT(A) has erred in law and on facts and in the circumstances of the case in confirming the disallowance of Business Promotion expenses of Rs. 22,14,395/- Hence, the appellant prays that this disallowance of Rs. 22,14,395/- upheld by the Ld CIT(A) should be deleted.

Ground No. 3: The Ld. CIT(A) has erred in law and on facts and in the circumstances of the case in confirming the adhoc disallowance on account of LC charges of Rs. 1,60,43,091/-. Hence, the appellant prays that this disallowance of Rs. 1,60,43,091/- upheld by the Ld. CIT(A) should be deleted.

Ground No. 4: The Ld. CIT(A) has erred in law and on facts and in the circumstances of the case in confirming the disallowance of Software Development expenses of Rs. 50,000/- by treated the same as capital in nature. 2 | P a g e

ITA No. 2084/Del/2011 Hence, the appellant prays that this disallowance of Rs. 50,000/- upheld by the Ld. CIT(A) should be deleted.

Ground No. 5: The Ld. CIT(A) has erred in law and on facts and in the circumstances of the case in confirming the disallowance of Loss on account of Foreign Currency Fluctuation of Rs. 96,94,578/-.

Hence, the appellant prays that this disallowance of Rs. 96,94,578/- upheld by the Ld. CIT(A) should be deleted.

Ground No. 6: The Ld. CIT(A) has erred in law and on facts and in the circumstances of the case in confirming the addition of Rs. 1,46,61,934/- on account of accrued interest income on FDRs. Hence, the appellant prays that this addition of Rs. 1,46,61,934/- upheld by the Ld. CIT(A) should be deleted.

Ground No. 7: The Ld. CIT(A) has erred in law and on facts and in the circumstances of the case in confirming the addition of Rs. 2,30,079/- on account of accrued interest income on FDRs. Hence, the appellant prays that this addition of Rs. 2,30,079/- upheld by the Ld. CIT(A) should be deleted.

Ground No. 8: The Ld. CIT(A) has erred in law and on facts and in the circumstances of the case in confirming the disallowance of expenses of Rs. 6,35,605/- booked under the head ‘Business Promotion Expenses’. 3 | P a g e

ITA No. 2084/Del/2011 Hence, the appellant prays that this disallowance of Rs. 6,35,605- upheld by the Ld. CIT(A) should be deleted.

Ground No. 9: The Ld. CIT(A) has erred in law and on facts and in the circumstances of the case in confirming the adhoc disallowance on account of LC charges of Rs. 3,93,03,134/- being 10% of the Expenses incurred on consumption of Engineering Stores and Printing & Stationery Expenses. Hence, the appellant prays that this disallowance of Rs. 3,93,03,134/- upheld by the Ld. CIT(A) should be deleted.

Ground No. 10: The Ld. CIT(A) has erred in law and on facts and in the circumstances of the case in confirming the disallowance of alleged unsupported expenses of Rs. 15,28,23,194/-.

Hence, the appellant prays that this disallowance of Rs. 15,28,23,194/- upheld by Ld. CIT(A) should be deleted.

Ground No. 11: The Ld. CIT(A) has erred in law and on facts and in the circumstances of the case in confirming the disallowance of provisions of Gratuity amounting to Rs. 5,88,374/-. Hence, the appellant prays that this disallowance of Rs. 5,88,374/-upheld by Ld. CIT(A) should be deleted.

Ground No. 12: The Ld. CIT(A) has erred in law and on facts and in the circumstances of the case in confirming the disallowance of taxes paid amounting

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ITA No. 2084/Del/2011 to Rs. 23,23,214/- under the provisions of section 43B of the Income Tax Act, 1961.

Hence, the appellant prays that this disallowance amounting to Rs. 23,23,214/- upheld by Ld. CIT(A) should be deleted.

Ground No. 13: The appellant craves leave to add, amend, alter or omit any of the above grounds of appeal as the circumstances may warrant on or before the date of hearing. ”

3.

Ld. CIT(DR) vehemently submits that both the learned lower authorities’ respective assessment and lower appellate findings making all the impugned disallowance/additions herein in the assessee’s hands do not warrant any interference on our part.

4.

It is in this factual backdrop that we proceed to deal with the assessee’s first and foremost substantive ground claiming business promotion expenses of Rs. 22,14,395/- as disallowed in both the learned lower proceedings. A perusal of the learned CIT(A) lower appellate discussion from page no. 18 onwards suggests that it appears to have organized sahara award night(s), sahara state exhibition, golf tournaments etc which indeed appears as in the nature of the expenses incurred wholly and exclusively for the purpose of the business although it appears to have failed in pleading and proving the same to the entire satisfaction of both 5 | P a g e

ITA No. 2084/Del/2011 the learned lower authorities. We thus deem it appropriate that a lumpsump disallowance of the assessee’s impugned claim @ 10% in the given facts would be just and proper with a rider that the same shall be treated as a precedent. Necessary computation shall follow as per law. This assessee’s first and foremost substantive ground partly succeeds.

5.

Next comes the second substantive issue between the parties wherein both the learned lower authorities have invoked 50% disallowance on account of the assessee’s Letter of Credit Charges “LC Charges” claimed amounting to Rs. 1,60,43,091/- in question. The Assessing Officer as well as the learned CIT(A) lower appellate discussion at page 84 onwards suggests that they have treated the same both as capital as well as revenue in nature for the purpose of allowing it to the extent of 50% only. We are of the considered view that such a disallowance based on mere conjectures and surmises @ 50% hardly deserves to be concurred with any specific rebuttal thereto in both the learned lower authorities’ respective discussions. The same stands deleted therefore.

6.

Next comes the third substantive issue of software development expenses disallowance of Rs. 50,000/- made in the 6 | P a g e

ITA No. 2084/Del/2011 assessee’s hands for the sole reason that it was a one time payment only. We are of the considered view that such a disallowance for the very precise reason is not sustainable in law without looking at the expenditure item itself which prima facie appears to have been incurred wholly and exclusively for the purpose of the business u/s 371(1) of the Act. Deleted accordingly.

7.

The assessee’s fifth substantive ground is that both the learned lower authorities erred in law and on facts in disallowing the loss on account of foreign currency fluctuation of Rs. 96,94,578/- in their respective detailed discussions. Learned CIT(DR) takes us to page nos. 113 to 114 in the CIT(DR)’s order that the assessee had indeed failed to explain the same as per schedule 20 of its annual account/balance-sheet along with the corresponding supportive details. We thus confirm the impugned foreign currency fluctuation loss claim disallowance in very terms.

8.

The assessee’s sixth and seventh substantive grounds seek to reverse both the learned lower authorities’ respective findings inter alia adding accrued interest income on FDRs and undisclosed interest income thereupon amounting to Rs. 1,46,61,934/- and Rs. 2,30,079/-; respectively. This latter 7 | P a g e

ITA No. 2084/Del/2011 ground is admittedly consequential to the former one wherein the learned CIT(DR) takes us to page 119 at para 12.2.3 in the learned CIT(A) lower appellate discussion that the assessee had failed to plead and prove the corresponding reconciliation between its interest income and the corresponding TDS deduction etc. Rejected accordingly.

9.

Learned CIT(DR) next takes us to assessee’s eight substantive ground regarding Business Promotion Expenses of Rs. 6,35,605/- disallowed in both the lower proceedings. The same admittedly represents refreshments, snacks and other similar items etc incurred in day-to-day business activities incurred wholly or exclusively for the purpose of business. The fact also remains that the assessee could not plead and prove the same with the help of supportive evidence to the entire satisfaction of both the learned lower authorities. We thus deem it appropriate in these facts that a lumpsump disallowance of Rs. 1,00,000/- only would be just and proper with a rider that the same shall not be treated as a precedent. Necessary computation shall follow as per law.

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ITA No. 2084/Del/2011 10. Next comes the assessee’s ninth substantive ground challenging ad-hoc disallowance @ 10% of expenses incurred on consumption of Engineering Store and Printing & Stationery items etc amounting to Rs. 3,93,03,134/-. We are of the considered view that although it had failed to plead and prove all the corresponding facts in both the learned lower proceedings, the same could not be disallowed at such a higher rate of 10% as well. We thus restrict the impugned disallowance @ 5% only with a rider that the same shall not be treated a precedent.

11.

The assessee’s tenth substantive ground raises the next issue of unsupported expenditure item claims to the tune of Rs. 15,28,23,194/- disallowed in para 17-19 of the assessment order as upheld at page 215 of the learned CIT(A)’s lower appellate discussion. The assessee has all alone failed to file the corresponding details thereof and the same factual position continues before the tribunal as well. Rejected accordingly.

12.

The assessee’s eleventh and twelfth substantive ground sseek to claim its provision of gratuity amounting to Rs. 5,88,374/- and disallowance of tax payments amounting to Rs. 23,23,214/- made in both the learned lower proceedings; 9 | P a g e

ITA No. 2084/Del/2011 respectively. Learned CIT(DR) inter alia takes us to page nos. 307 & 314 of the lower appellate discussion wherein it had failed to file any proof of payment thereof despite having affected adequate opportunities of herein. Upheld accordingly.

13.

This assessee’s appeal is partly allowed in above terms.

Order pronounced in the open court on 05.06.2026 .

Sd/- Sd/- (MANISH AGARWAL) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated:05.06.2026 Pooja Mittal/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi

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