PR. COMMISSIONER OF INCOME TAX -4 vs. NIDRA HOSPITALITY PVT. LTD.

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ITA/203/2026HC DelhiDLHC01110135202521 April 2026Author: HON'BLE MR. JUSTICE VINOD KUMAR,HON'BLE MR. JUSTICE DINESH MEHTA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue was purely a question of fact and appreciation of evidence. It concurred with the findings of the Tribunal and the CIT(A) that the Assessing Officer cannot substitute his judgment for that of the assessee. Given that the investor, Nidra Holdings Pte Ltd., Singapore, is the holding company of the respondent-assessee, the Court found no error in the appellate authorities' conclusion that the transaction was genuine and that the AO's role was not to question the business wisdom of the investor. Consequently, the appeal filed by the Revenue was dismissed.

What were the facts?

The appellant, Principal Commissioner of Income Tax-4, filed an appeal under Section 260A of the Income Tax Act, 1961, challenging an order dated December 18, 2024, passed by the Income Tax Appellate Tribunal (ITAT). The ITAT had affirmed an order dated April 17, 2023, by the Commissioner of Income Tax (Appeals) (CIT(A)). The dispute arose when the Assessing Officer (AO) added Rs. 6,47,79,691/- to the respondent-assessee's income under Section 68 of the Act. This addition was made on the grounds that shares purchased by Nidra Holdings Pte Ltd., Singapore, for this amount at a premium of Rs. 790 per share, were not a genuine investment but a paper transaction. The CIT(A) had allowed the assessee's appeal, finding the transaction was through bank channels, the investing company had sufficient funds, and the AO could not question the business need or investor's wisdom.

What were the issues?

1. Whether the transaction of share purchase by Nidra Holdings Pte Ltd., Singapore, for Rs. 6,47,79,691/- at a premium of Rs. 790 per share constitutes a genuine investment or a paper transaction, thereby attracting addition under Section 68 of the Income Tax Act, 1961? (Question of mixed law and fact) Assessee's Contention: The respondent-assessee argued that M/s Nidra Holdings Pte Ltd., Singapore, is its holding company and subscribed to the shares as per its business wisdom, which the AO could not question under the prevailing provisions. Revenue's Contention: The appellant-Department argued that the Singapore company, Nidra Holdings Pte Ltd., had no business of its own and had obtained interest-free loans from other companies, suggesting the transaction was not genuine.

Which sections of the Income-tax Act were involved?

Section 260A,Section 68

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
$~7 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 203/2026 PR. COMMISSIONER OF INCOME TAX -4 .....Appellant Through: Mr. Gaurav Gupta, SSC with Mr.Shivendra Singh, JSC, Mr. Yojit Pareek, JSC and Mr. Surya Jindal, Adv. versus NIDRA HOSPITALITY PVT. LTD. .....Respondent Through: Mr. Gaurav Jain, Mr. Shubham Gupta & Ms. Varsha Sharma, Advs. CORAM: HON'BLE MR. JUSTICE DINESH MEHTA HON'BLE MR. JUSTICE VINOD KUMAR

O R D E R %

21.04.

2026 CM APPL. 16589/2026

1.

This is an application filed by the appellant seeking condonation of 241 days’ delay in re-filing the appeal.

2.

For the reasons stated therein, the application is allowed and the delay of 241 days in re-filing is condoned.

3.

The application is disposed of. ITA 203/2026

4.

By way of the present appeal filed under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’), the appellant- Principal Commissioner of Income Tax-4 has challenged the order dated 18.12.2024 passed by the Income Tax Appellate Tribunal, Bench ‘E’, New This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/04/2026 at 12:39:47

Delhi (hereinafter referred to as ‘the Tribunal’) whereby the Tribunal has affirmed the order dated 17.04.2023 passed by the Commissioner of Income Tax (Appeals) (hereinafter referred to as ‘CIT (A)’).

5.

The facts appertain are that a company-Nidra Holdings Pte Ltd., Singapore had purchased shares of the respondent-assessee for a consideration of Rs.6,47,79,691/- at a premium of Rs.790 per share. During the course of the assessment proceedings, the Assessing Officer made an addition of this amount under Section 68 of the Act of 1961, by observing that the said transaction is not a genuine investment but is only a paper transaction.

6.

The CIT(A) allowed assessee’s appeal by way of order dated 17.04.2023, after examining the transaction found the transaction to have been carried out through bank channels. He further recorded a finding that the investing company in Singapore had sufficient funds and the Assessing Officer cannot sit in the armchair of the assessee to examine the business need of the assessee so also the investor’s wisdom.

7.

The Tribunal affirmed the findings of the CIT (A) vide the impugned order dated 18.12.2024, against which the Income Tax Department has approached this Court in appellate jurisdiction under Section 260A of the Act of 1961. 8. Learned senior standing counsel for the appellant-Department argued that the facts on record clearly show that the Singapore company namely Nidra Holdings Pte Ltd. did not have any business and that it had taken interest-free loans from other companies.

9.

Learned counsel for the respondent, on the other hand, submitted that M/s Nidra Holdings Pte Ltd., Singapore is a holding company of the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/04/2026 at 12:39:47

respondent-assessee and the shares were subscribed/purchased by the said company as per its business wisdom, which cannot be questioned by the Assessing Officer as per the provisions existing at the relevant time.

10.

Having heard learned counsel for the parties, we are of the view that the issue before us is purely a question of fact and appreciation of evidence. We concur with the view taken by the Tribunal and the CIT (A) that the Assessing Officer cannot sit in the armchair of the assessee. Given that the investor is holding company of the respondent-assessee, there is no error in the finding recorded by the Appellate Authorities.

11.

In view of the aforesaid, the appeal is dismissed.

DINESH MEHTA, J

VINOD KUMAR, J APRIL 21, 2026 kk

This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/04/2026 at 12:39:47

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