ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-25(1), NEW DELHI vs. VENUS PORTFOLIOS PRIVATE LIMITED, NEW DELHI

3.2 Aggrieved with the order of Ld. CIT(A), revenue is in appeal before the Tribunal.

Briefly stated the relevant facts are that the assessee had received unsecured loans of Rs. 7,00,00,000/- from M/s Taurus Assets Management 2 | P a g e ACIT Vs Venus Portfolios Pvt Ltd. Company Ltd. and Rs. 20,00,000/- from M/s HLA Investments Pvt. Ltd. After considering the details submitted by the assessee, Ld. AO held that the creditworthiness of the lenders had not been established and, therefore, the loan transactions were treated as unexplained credit and added u/s 68 of the Act.

4.1 During the course of appellate proceedings, Ld. CIT(A) sought a remand report from the Ld. AO on the documentary evidences filed before him. After considering the remand report and examining the assessee’s submissions, Ld. CIT(A) deleted the addition with the following observations:

“7.3.2 From the above, it is seen that the Assessing Officer has made two contrary observations. On the one hand it is argued that the appellant has not filed any details for substantiating the loan transactions and on the other hand it is argued that the appellant has not filed any new evidence as additional evidence. It has also been noted that the appellant had filed requisite details during the course of assessment proceedings. In the Remand Report the Assessing officer has not pointed out any discrepancies in the documents furnished during appellate proceedings and has merely recommended against the admission of additional evidence. However, no cogent reason has been provided for the same. Since, the additional evidence has been admitted as discussed in para above the same is being examined in subsequent paragraphs. With respect to Taurus Asset Management Company Ltd. i) The appellant has submitted the ITR-V of Taurus Asset Management Company Ltd and the bank statement for the relevant period. ii) Loan confirmation is also on record. iii) It has further produced audited financials to prove the creditworthiness of the lender. On perusal of Statement of Profit & Loss, it is seen that the lender company has profit after tax of Rs. 12,97,90,272/- and has paid current year tax of Rs. 3,16,98,130/-. In the assessment order, the Assessing Officer has erroneously considered the amount of tax paid by the lender as 3 | P a g e ACIT Vs Venus Portfolios Pvt Ltd. per ITR-V to be the returned loss for AY 2016-17 (Para 7 of assessment order). iv) In continuation, vide Para 7.2 of the assessment order, the Assessing Officer contends that It is further surprising to note that the assessee company has received huge unsecured loans from a company based in Mumbai, without any loan agreement and interest. In response, the appellant has produced TDS certificates (Form 16A) to substantiate interest paid and TDS deducted thereon. It is noted that interest due as per ledger in the books of Taurus matches with amount reported in TDS returns filed by appellant company. Therefore, the observations made by the Assessing Officer are devoid of any merit. With respect to HLA Investments Pvt. Ltd.(HLA) i) The appellant has submitted the ITR-V of the lender and bank statement for the relevant period. ii) Ledger account of HLA is on record. iii) It is further noted from the audited financials of the lender that HLA has profit after tax of Rs. 10,05,005/- and Reserves & Surplus of Rs. 2,72,43,741/-. Further, returned income is Rs. 13,74,670/-, which shows creditworthiness to lend the loan. Additionally, it is evident from bank statement and confirmation of accounts that the HLA has advanced a sum of Rs. 20,00,000/- to appellant for purchase of securities on 30.05.2015, which was then refunded to HLA on 14.07.2015 along with interest. iv) The appellant has also produced TDS certificates (Form 16A) to substantiate interest paid and TDS deducted thereon. It is noted that interest due as per ledger in the books of HLA matches with amount reported in TDS returns filed by appellant company. Therefore, the observations of the Assessing Officer are devoid of any merit.”

4.2. We have heard the rival submissions and perused the material available on record. We are of the considered view that the assessee had been able to discharge

4 | P a g e ACIT Vs Venus Portfolios Pvt Ltd. its onus of establishing the identity of the lenders as well as their creditworthiness and genuineness of the transactions. Ld. CIT(A) has passed a speaking order examining all the facts and evidences and has rightly deleted the addition of Rs. 7,20,00,000/- u/s 68 of the Act. We, therefore, find no reason to interfere with the order of Ld. CIT(A). Accordingly, this ground of Revenue’s appeal is hereby dismissed.

Briefly stated, the assessee had computed the amount of disallowance u/s 14A r.w. Rule 8D at Rs. 1,89,16,912/- at the time of filing of return. Further, amount disallowable @ ½ % of average investments was worked out at Rs. 42,005/- and the same was disallowed by the assessee. However, Ld. AO computed the ½% of average investment at Rs. 16,00,479/- and hence disallowed Rs. 15,58,474/- [Rs. 16,00,479/- minus Rs. 42,005/-].

5.1 Before Ld. CIT(A), the assessee furnished the following chart:

“With regard to working of disallowance under Rule 8D, the following is the Disallowance made Disallowance made Difference by the assesseee in by the AO the computation of income 1. Interest 1,89,16,912/- 1,89,16,912/- NIL 2. Other 42,005/- 16,00,479/- 15,84,474/- expenses (1/2 of Avg. value of Investment) 1,89,58,918/- 2,05,17,391/- 15,58,474/-

5 | P a g e “8.4 I have perused the assessment order, Remand Report and appellant’s submission and subsequent clarification on this issue. It is clear in this case that the appellant has suo moto made a disallowance of Rs 1,89,16,912 on account of deemed interest expenses incurred as per limb 2(ii) of Rule 8D. This working is same as the computation of disallowance made by the Assessing Officer in the assessment order. The only dispute is in relation to the computation of disallowance as per limb 2(iii) of Rule 8D. Here, the Assessing Officer has worked out the disallowance of Rs 16,00,479 as per Rule 8D(2)(iii). Whereas, the Appellant has restricted to same to Rs 42,005 on two counts: 1. The total other expenses claimed in the profit and loss account apart from the finance cost is Rs 42,005 only.

2. The exempt income earned during the year is Rs 1,99,663 only and the total disallowance u/s 14A r.w.s. 8D cannot exceed the same. The appellant has relied on The case law of Hon’ble Delhi High Court in ITA 163/2018, The Pr.CIT -3 versus Devata Tradelink Limited. 8.5 In light of the appellant’s contention and the case law relied upon of the Hon’ble jurisdictional High Court, I am of the opinion that the case law is squarely applicable to the facts of the appellant’s case. The contention of the appellant is accepted and the disallowance of Rs 15,58,474 made u/s 14A r.w.s 8D is hereby deleted. Accordingly, this Ground of appeal is allowed. ”

5.2 We have heard the rival submissions and perused the material on record. We note that Ld. CIT(A) has rightly deleted the addition of Rs. 15,58,474/- made by Ld. AO over and above the suo moto disallowance of Rs. 1,89,16,912/- made by the assessee after considering the entire factual matrix in the light of settled legal position. Since Ld. CIT(A) has passed a reasoned and speaking order, we find no reason to interfere with the same.

Order pronounced in the Open Court on 08-01-2026.