KLSR INFRATECH LIMITED,HYDERABAD vs. DCIT, CENTRAL CIRCLE-1(2), HYDERABAD

ITA 2323/HYD/2025Status: DisposedITAT Hyderabad30 September 2026AY 2016-1755 pages
AI SummaryAllowed

What were the facts?

The assessee, KLSR Infratech Limited, filed appeals against orders of the CIT(A) for assessment years (AY) 2015-16 to 2020-21. These appeals arose from orders passed by the Assessing Officer (AO) under sections 143(3) and 153A of the Income Tax Act. The issues involved were related to additions on account of unexplained expenditure based on a seized diary, the inclusion of interest income on fixed deposits for Section 80IA deduction, and the recharacterization of surrendered income as unexplained money. The assessee had filed its original return for AY 2017-18 on 20/07/2017, declaring NIL income after claiming a deduction under Section 80IA(4). A search operation was conducted on 27.09.2018, followed by a notice under Section 153A. The AO made additions/disallowances, which were partly sustained by the CIT(A). The present appeals are against the CIT(A)'s orders.

What did the Tribunal hold?

The Tribunal held that the issue concerning the addition on account of unexplained expenditure based on the diary entries (Ground No. 3(i) to (iv)) was allowed in favour of the assessee in part. The Tribunal directed the AO to consider the diary entries as unexplained expenditure under Section 69C, but after telescoping the amount of Rs.1,03,19,000/- to Rs.14,07,218/-. Regarding the addition under Section 69A (Ground No. 4), the Tribunal did not record any specific finding or decision in the provided text, implying it was either not pressed or decided in line with other grounds. For the issue of interest income on fixed deposits for bank guarantees (Ground No. 5 and 3(i) for AY 2020-21), the Tribunal allowed the appeal. It directed the AO to include the interest income (Rs.70,33,248/- for AY 2017-18 and Rs.84,65,808/- for AY 2020-21) while computing the deduction under Section 80IA(4), subject to verification that the FDRs were maintained for bank guarantees related to eligible infrastructure projects and not as independent investments. Grounds 1, 2, and 4 were dismissed as not pressed. The operative direction was to allow the appeal in terms of the observations.

What were the issues?

The Tribunal had to decide the following issues: 1. Whether the CIT(A) erred in holding that amounts found in a diary marked A/KLSR/RES/07 represent unexplained expenditure relating to the appellant, and whether the AO could use this material without invoking Section 153C, and if the CIT(A) erred in confirming an addition of Rs.1,03,19,000/- out of Rs.2,60,19,000/-, considering the assessee's explanation that payments were for business purposes and reconciled with books of account. - Assessee's contention: The material was found at the MD's residence, and Section 153C should have been invoked. Payments in the diary are explained, reconciled, and recorded in books. The entire addition should be deleted. - Revenue's contention: Not recorded. 2. Whether the CIT(A) erred in confirming the addition of Rs.2,98,54,070/- under Section 69A, when this amount was a reversal entry of additional income surrendered and debited to the cash account, with an equal amount already admitted as additional income in the return. - Assessee's contention: The amount is a reversal entry of additional income already declared and included in 'other income', not unexplained cash. - Revenue's contention: Not recorded. 3. Whether the CIT(A) erred in holding that interest received of Rs.95,21,198/- (for AY 2017-18) and Rs.84,65,808/- (for AY 2020-21) on fixed deposits made for providing bank guarantees does not form part of the gross total income for the purposes of Section 80IA(4). - Assessee's contention: The interest income on FDRs for bank guarantees should be included for Section 80IA(4) deduction, as it represents business receipts or proportionate interest paid to the bank should be reduced from interest received. - Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 80IA,Section 143(3),Section 153A,Section 69C,Section 69A,Section 153C

AI-generated summary — verify with the full judgment below

आयकर अपीलीय अिधकरण, हैदराबाद पीठ", हैदराबाद INCOME TAX APPELLATE TRIBUNAL, HYDERABAD BENCHES, HYDERABAD BENCH: B BEFORE SHRI MANJUNATHA G, HON’BLE ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER ITA 1808, 1809, 1810, 1811/HYD/2025 िनधा"रण वष"/Assessment Year: 2017-18, 2018-19, 2019-20, 2020-21 KLSR INFRATECH LIMITED DCIT, CENTRAL CIRCLE-1(2) HNO 2-56/D/213/9B, KLSR O/o. DCIT, CENTRAL CIRCLE- MADHAPUR, HYDERABAD- TELANGANA. 500081, TELANGANA अपीलाथ" Appellant ""थ" Respondent

Permanent Account Number of Assessee: AAECK2226P

ITA 2321, 2322 & 2323/HYD/2025 िनधा"रण वष"/Assessment Year: 2015-16 & 2016-17 KLSR INFRATECH LIMITED DCIT, CENTRAL CIRCLE-1(2) HNO 2-56/D/213/9B, KLSR O/o. DCIT, CENTRAL CIRCLE- MADHAPUR, HYDERABAD- TELANGANA. 500081, TELANGANA अपीलाथ" Appellant ""थ" Respondent

Permanent Account Number of Assessee: AAECK2226P

अपीलाथ" "ारा/Appellant represented by: Shri S Rama Rao, Advocate ""थ" "ारा/Respondent represented by: Shri Waseem UR Rehman, CIT-DR

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