M/S. HARSHA ENGINEERS INTERNATIONAL LTD. (MERGED FROM HARSHA ABACUS SOLAR PVT. LTD.),AHMEDABAD vs. THE DY.CIT, CIRCLE-2(1)(1), AHMEDABAD

ITA 1357/AHD/2024Status: DisposedITAT Ahmedabad01 October 2026AY 2018-193 pages
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What were the facts?

The assessee, M/s. Harsha Engineers International Limited (merged from M/s. Harsha Abacus Solar Pvt. Ltd.), filed an appeal against the order of the Ld. Commissioner of Income Tax (Appeals) (NFAC, Delhi) dated 04.07.2024 for Assessment Year 2018-19. The appeal challenges the confirmation of disallowance of processing fees and the non-grant of TDS credit. The Assessing Officer had disallowed processing fees treating them as capital in nature, which was confirmed by the Ld. CIT(A). The assessee also contended that the Ld. CIT(A) erred in not granting the benefit of TDS amounting to Rs. 2,08,15,442.60. The appeal was heard on 08.07.2026 and pronounced on 01.10.2026.

What did the Tribunal hold?

On Ground No. 1, the Tribunal noted it was general in nature and did not provide specific findings or reasoning. On Ground No. 2, concerning the disallowance of processing fees, the Tribunal held that the issue requires examination of the period to which the expenditure relates and the purpose of the borrowings. It stated that payment to a bank or treatment as prepaid expenditure does not inherently make it capital in nature. The Tribunal directed the Assessing Officer to examine if the processing fee was part of the acquisition of capital assets. Consequently, the finding of the Ld. CIT(A) was set aside, and the matter was restored to the Assessing Officer for fresh adjudication. Ground No. 2 was allowed for statistical purposes. On Ground No. 3, regarding TDS credit, the Tribunal noted that the Ld. CIT(A) had already directed the Assessing Officer to grant credit in accordance with law. Therefore, the Tribunal declined to interfere with the Ld. CIT(A)'s order. The appeal was partly allowed for statistical purposes.

What were the issues?

1. Whether the Assessing Officer's order was passed in gross violation of Section 144B of the Income-Tax Act, 1961? The assessee contended that the order was passed in gross violation of Section 144B. The revenue's contentions are not recorded. 2. Whether the disallowance of Rs.93,34,795/- on account of processing fees is justified under Section 37 of the Act? The assessee argued that the expenditure related to services extending into the year under consideration and relied on bank debit advices. The revenue's contentions are not recorded. 3. Whether the assessee is entitled to the benefit of TDS amounting to Rs. 2,08,15,442.60/- allowable under Section 199 of the Act? The assessee challenged the non-grant of TDS credit. The Ld. CIT(A) noted that no submission was made by the assessee on this issue, but directed the Assessing Officer to grant credit. The revenue's contentions are not recorded.

Which sections of the Income-tax Act were involved?

Section 144B,Section 37,Section 199,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: DR. B.R.R. KUMAR, VICE-SHRI RAHUL CHAUDHARY

For Appellant: Shri Mohit Balani, AR
For Respondent: Shri Arvind Kumar Namdeo, Sr. DR
Hearing: 08.07.2026Pronounced: 01.10.2026

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:

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This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals) (hereinafter referred to as “Ld. CIT(A)”), National Faceless Appeal Centre (NFAC), Delhi vide order dated 04.07.2024, under section 250 of the Income-Tax Act, 1961 (hereinafter referred to as “the Act”) for the Assessment Year 2018-19. 2. The assessee has raised following grounds of appeal:- “1. Learned CIT(A) has erred in law and on the facts of the case in confirming the action of learned AO in passing th

The order continues below.

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