ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 4(1), KOLKATA, KOLKATA vs. LAKHOTIA TRANSPORT CO. PRIVATE LIMITED, KOLKATA

PDF · subscribers
ITSSA 127/KOL/2024Status: DisposedITAT Kolkata05 December 20243 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the appeal filed by the Revenue is not maintainable due to the tax effect being below the prescribed limit in CBDT Circular No. 09/2024, and the case does not fall under any exemption clause. The Tribunal noted that the Ld. CIT(A) had not held the assessee to be a shell company. Instead, the Ld. CIT(A)'s order indicated that the assessee had discharged its onus by providing necessary details and documents for loans received, leading to the deletion of additions related to interest payments. The Tribunal found no agreement with the Revenue's contention that the assessee is a shell company. Consequently, the appeal was dismissed under Section 268A of the Act due to the tax effect being lower than the prescribed limit. The operative direction was the dismissal of the Revenue's appeal.

What were the facts?

The Revenue has filed an appeal against the order of the Ld. Commissioner of Income Tax (Appeals)-27, Kolkata, dated 18.06.2024, for Assessment Year 2021-22. The appeal was filed with a delay of 45 days, which was condoned by the Tribunal due to the consent of the assessee. The core of the dispute revolves around the tax effect of the disputed addition, which is stated to be less than Rs. 60 Lacs, falling below the threshold prescribed in CBDT Circular No. 09/2024. The Revenue contended that their case falls under an exemption clause, while the assessee argued it is not a shell company and is a sister concern of Lakhotia Diagnostic Services Pvt. Ltd. The Ld. CIT(A) had deleted additions related to interest payments on loans.

What were the issues?

1. Whether the appeal filed by the Revenue is maintainable given the tax effect is below the prescribed limit as per CBDT Circular No. 09/2024, and if the case falls under any exemption clause (Question of law). Contentions: Assessee: The assessee argued that it is not a shell company and is a sister concern of Lakhotia Diagnostic Services Pvt. Ltd. The Ld. CIT(A) did not hold the assessee to be a shell company. The assessee relied on decisions in DCIT vs. Lakhotia Diagnostic Service Pvt. Ltd. (ITA No. 1320/Kol/2024) and DCIT vs. Lakhotia Motors Pvt. Ltd. (IT(SS)A No. 93/Kol/2024). Revenue: The Revenue contended that their case comes under the exemption clause of the CBDT Circular, implying the appeal should be admitted despite the low tax effect.

Which sections of the Income-tax Act were involved?

Section 250,Section 68,Section 39C,Section 268A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH: KOLKATA

Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]

आयकर अपील�य अ�धकरण, कोलकाता पीठ “ए’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA �ी राजेश कुमार, लेखा सट�य एवं �ी �द�प कुमार चौबे, �या�यक सद�य के सम� [Before Shri Rajesh Kumar, Accountant Member &Shri Pradip Kumar Choubey, Judicial Member] I.T(SS).A. No. 127/Kol/2024 Assessment Year: 2021-22 ACIT, Central Circle-4(1), Kolkata Vs. Lakhotia Transport Co. Pvt. Ltd.

(PAN: AAACL 8147 J) ( अपीलाथ� ) Respondent / ��यथ� Appellant / Date of Hearing / सुनवाई 25.11.2024 क� �त�थ Date of Pronouncement/ 05.12.2024 आदेश उ�घोषणा क� �त�थ For the assessee / Shri Sunil Surana, FCA �नधा�रती क� ओर से For the revenue / राज�व Shri Subhendu Datta, CIT DR क� ओर से

ORDER / आदेश Per Pradip Kumar Choubey, JM: This is an appeal preferred by the revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-27, Kolkata (hereinafter referred to as the “Ld. CIT(A)”] dated 18.06.2024 for the AY 2021-22. 2. As it appears from the record that this appeal has been filed by the department after delay of 45 days. The ld. Counsel appeared on behalf of the department submitted that the delay has been occurred on account of huge work of the department and his

2 I.T.(SS)A. No.127/Kol/2024 Assessment Year: 2021-22 Lakhotia Transport Co. Pvt. Ltd. prayer is to be condoned the delay. The Ld. Counsel appeared on behalf of the assessee did not raise any objection rather he gave consent on the admission of the appeal after condoning the delay. Keeping in view, the consent of the assessee, the delay is hereby condoned.

3.

It is seen at the outset that the tax effect on the disputed addition before us is less than Rs. 60 Lacs as prescribed in the CBDT latest Circular No. 09/2024 dated 17.09.2024. The ld. Counsel appeared on behalf of the department submits that his case comes under the exemption clause. Contrary to that, it has been argued by the ld. Counsel for the assessee that the assessee is not a shell company rather it is sister concern of the Lakhota Diagnostic Services pvt. Ltd. and the Ld. CIT(A) did not held that the assessee is a shell company. The Ld. Counsel cited two decisions of the ITAT which are as under:

i) In the case of DCIT vs. Lakhotia Diagnostic Service Pvt. Ltd. in ITA NO. 1320/Kol/2024 for AY 2017-18 dated 11.11.2024

ii) In the case of DCIT vs. Lakhotia motors Pvt. Ltd. in IT(SS)A No. 93/Kol/2024 for AY 2021-22 dated 17.10.2024

4.

We have gone through the order of Ld. CIT(A) passed u/s 250 of the Act and find that in nowhere it has been held by the Ld. CIT(A) that the assessee is a shell company rather in the operative portion of the Ld. CIT(A) order which has been held thus:

“5.2.2. It is important to mention that the assessee had paid interest of Rs. 6,000/- to M/s Hallmark Commerce Pvt. Ltd. against a loan of Rs. 2,00,000/- received by it in the FY 2018- 19, which was added by the AO in the assessment order pertaining to AY 2019-20. It is to be noted that the aforesaid addition was deleted vide appellate order dated 04.06.2024. Further, the assessee had paid interest of Rs. 2,10,000/- to M/s MCR Finvest Pvt. Ltd. against loans received by it since the FY 2014-15. However, these loans were never ever disputed by the department. Again the assessee had paid interest of Rs. 3,60,000/- to M/s Mihika Industries Ltd. against a loan of Rs. 25,00,000/- received by it in the FY 2018-19. It is to be noted that the aforesaid addition was deleted vide appellate order dated 04.06.2024. Further, the assessee had paid interest of Rs. 3,00,000/- to M/s Tribute Trading and Finance Ltd. against loans received by it since the FY 2014-15. However, these loans were never ever disputed by the department. Hence, the assessee had discharged its onus to prove the three primary limbs of the deeming provisions u/s 68 and 39C of the Act in an effective manner by providing necessary

3 I.T.(SS)A. No.127/Kol/2024 Assessment Year: 2021-22 Lakhotia Transport Co. Pvt. Ltd. details and documents in respect of the aforesaid loan creditors. Hence, the addition made by the AO against the corresponding aforesaid interest payments of Rs. 8,76,000/-.” Keeping in view, the facts of the case as well as the order passed by the Ld. CIT(A), we are not in agreement with the contention of the ld. Counsel of the department that the assessee is a shell company. Accordingly, the present appeal do not come within the ambit of exempt clause. Hence, the appeal of the revenue is dismissed u/s 268 A of the Act because of tax effect lower than the prescribed limit as per CBDT Circular (supra). In the result, the appeal of the revenue is dismissed. Order is pronounced in the open court on 5th December, 2024

Sd/- Sd/-

(Rajesh Kumar/राजेश कुमार) (Pradip Kumar Choubey /�द�प कुमार चौबे) Accountant Member/लेखा सद�य Judicial Member/�या�यक सद�य Dated: 5th December, 2024 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- ACIT, Central Circle-4(1), Kolkata 2. Respondent – Lakhotia Transport Co. Pvt. Ltd., Ground Floor, 26, Tara Chand Dutta Street, West Bengal-700073. 3. Ld. CIT(A)-27, Kolkata 4. Ld. Pr. CIT- Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →