ASSISTANT COMMISSIONER OF INCOME TAX, DELHI V. VIREET INVESTMENTS PRIVATE LIMITED, DELHI

ITA 3010/DEL/2024

AI Insights

The case involves the Assistant Commissioner of Income Tax (Appellant) against Vireet Investments Pvt. Ltd. (Respondent) concerning the Assessment Year 2007-08. The primary issues were the deletion of additions made by the AO regarding the exemption claimed under section 10(38) of the Income Tax Act for LTCG and the addition of notional interest income. The CIT(A) had earlier ruled in favor of the assessee, which the Revenue challenged. The ITAT upheld the CIT(A)'s decision on the notional interest income but remitted the issue of LTCG back to the AO for further examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783941 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 18-06-2024
• Other Referred Cases: Collector, Land Acquisition, Anantnag & Anr. Vs Mst. Katiji and others, N. Balakrishnan Vs M. Krishnamurthy, HL Malhotra & Company Pvt. Ltd. (ITA No. 211/2020 & CM Appeals 32045-32047/2020 dated 22nd December, 2020), State Bank of Travancore Vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMISHA S. GUPT
• Assessee Lawyers: MANISH JAIN
• Keywords: Capital asset; Capital Gains; Earning of tax free income; Notional interest
• Section: 115JB

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’: NEW DELHI BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA No.3010/Del/2024, A.Y. 2007-08 Assistant Commissioner of Income Tax, Room No. 192A, First Floor C R Building, I P Estate, New Delhi- 110002 Vs. Vireet Investments Pvt. Ltd. 12 A/3, Friends Colony New Delhi PAN: AAACV2033M (Appellant) (Respondent) Appellant by Ms. Amisha S. Gupt, CIT(DR) Respondent by Sh. Manish Jain, CA Date of Hearing 18/08/2025 Date of Pronouncement 14/11/2025 ORDER PER AVDHESH KUMAR MISHRA, AM This appeal for Assessment Year (‘AY’) 2007-08 filed by the Revenue is directed against the order dated 30.03.2024 of the Commissioner of Income Tax (Appeals), NFAC, New Delhi [‘CIT(A)’]. 2. Following effective grounds have been raised by the Revenue: - “1. Whether, on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs.8,90,66,252/- on account of disallowance u/s 10(38) of the IT Act. 2. Whether, on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs.10,49,768/- on account of interest income.” Printed from counselvise.com ITA No. 3010 /Del/2024 Vireet Investments Pvt. Ltd. 2 3. The relevant facts giving rise to this appeal are that the respondent assessee filed its Income Tax Return ‘ITR’) on 30.10.2007 declaring NIL income comprising of business loss of Rs. (-) 82,00,995/-, income from the house property at Rs.1,35,800/- and Long-Term Capital Gains (‘LTCG’) of Rs.50,44,027/- and the exempted LTCG of Rs.8,90,66,252/-. However, it offered a sum of Rs.8,21,45,406/- as income under section 115JB of the Income Tax Act, 1961 (‘the Act’). The case was picked up for scrutiny and consequential assessment was completed at income of Rs.11,75,90,926/- by making various additions and disallowances. Aggrieved, the assessee filed appeal before the Ld. CIT(A) and succeeded. Dissatisfied with the impugned order, the Revenue challenged the deletion of addition of Rs.8,90,66,252/- claimed exempt under section 10(38) of the Act and deletion notional interest of Rs.10,49,768/- taxed by the Ld. Assessing Officer (‘AO’). 3.1 The Revenue’s appeal is delay by 20 days. Condonation application was duly considered by us. Keeping in view decisions of the Hon’ble Supreme Court in cases of Collector, Land Acquisition, Anantnag & Anr. Vs Mst. Katiji and others (1987) 2 SCC 107 and N. Balakrishnan Vs M. Krishnamurthy 1998 (7) SCC 123 and the decision of Hon’ble Delhi High Court in the case of HL Malhotra & Company Pvt. Ltd. (ITA No. 211/2020 & CM Appeals 32045- 32047/2020 dated 22nd December, 2020), the delay is condoned and the appeal is being decided on merit. Disallowance of claim of exemption under section 10(38) of the Act Printed from counselvise.com ITA No. 3010 /Del/2024 Vireet Investments Pvt. Ltd. 3 4. The Ld. AO, holding that the assessee has failed to demonstrate that the said share on whose transfer the LTCG derived were equity share and units of mutual fund were of equity-oriented fund, denied the claim of exemption under section 10(38) of the Act. The relevant part of the assessment order with respect to the issue of denial of exemption of Rs.8,90,66,252/- under section 10(38) of the Act reads as under: - “6. Disallowance of exemption claimed u/s 10(38) 1. In the computation of income of the assessee furnished vide their letter dated 7-12-2009, an amount of Rs.8,90,66,252/- has been claimed as exempted being Long Term Gains on Securities-STT. Details of this income claimed exempt has been given by the assessee vide their letter dated 21- 08-2009 as follows: Long Term Capital Gain (STT) i. Mutual Funds Rs. 64,67,213/- ii. Shares (Rs. 11,73,187/-) iii. PMS Shares Rs. 7,14,85,406/- iv. PMS Mutual Funds Rs. 1,22,86,820/- Rs. 8,90,66,252/- 6.2 Provisions of Section 10(38) provides as follows: \"(38) any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund where- (a) the transaction of sale of such equity share or unit is entered into on or after the date on Which Chapter VII of the Finance (No. 2) Act, 2004 comes into force; and (b) such transaction is chargeable to securities transaction tax under that Chapter: Printed from counselvise.com ITA No. 3010 /Del/2024 Vireet Investments Pvt. Ltd. 4 [Provided that the income by way of long-term capital gain of a company shall be taken into account in computing the book profit and income-tax payable under section 115JB] Explanation. - For the purposes of this clause, \"equity oriented fund\" means a fund- (i) where the investible funds are invested by way of equity shares in domestic companies to the extent of more than [sixty-five] per cent of the total proceeds of such fund; and (ii) which has been set up under a scheme of a Mutual Fund specified under clause (23D): Provided that the percentage of equity shareholding of the fund shall be computed with reference to the annual average of the monthly averages of the opening and closing figures;]\" 6.3 Provisions of this section require Mutual Funds to be an \"Equity Oriented Fund\". The assessee had also been asked to furnish details of its dividend income during the course of assessment proceedings. These were submitted by the assessee vide their letter dated 21-08-2009 in Annexure- G. Details as per this annexure includes dividend received funds under PMS and Other than PMS. From a perusal of details of the dividend income of the assessee a large part of the Mutual Fund are Debt funds or Liquid Funds. Therefore, they do not seem to be Equity Oriented Funds. 6.4 In this regard, it is pertinent to mention that vide letter dated 11-12- 2009 the assessee had been asked to furnish its response and details as below: \"(5). In respect of dividend received by the assessee company and claimed as exempt at Rs 5,05,36,760/-. Please give details of the subsequent sale / redemption of such shares and mutual funds and show cause as to why provisions of section 94 of the I. T. Act are not attracted.\" 6.5 In response to this, the assessee vide their letter dated 15-12-2009 had submitted details of its dividend income (Both PMS & Other than PMS). From a perusal of these details it is seen that most of the mutual fund transactions are within 7 to 8 days of its purchase. As such it appears that the dividend income claimed exempt pertains to funds other than Equity Printed from counselvise.com ITA No. 3010 /Del/2024 Vireet Investments Pvt. Ltd. 5 Oriented Funds as per stipulation in Provision of section 10(38) of the I. T. Act, 1961. 6.6 In the absence of evidence to prove that the Long-Term Capital Gains claimed exempt u/s 10(38) is only from transfer of \"an equity shares in a company or a unit of an equity-oriented fund\" the amount of Rs. 8,90,66,252/- is to be assessed as the income of the assessee from Other Sources. (Addition of Rs. 8,90,66,252/-) 5. Aggrieved with the assessment order, the assessee filed appeal before the Ld. CIT(A) and git relief on the above mentioned two issues. Before the Ld. CIT(A), the assessee submitted following submission challenging both issues: - “4. The fourth ground of appeal is in respect of disallowance of exemption of Long Term Capital Gains on Equity Shares & Equity Oriented Mutual Funds exempt u/s 10(38) of Rs.8,90,66,252/-, where the Learned Assessing Officer has erred in not allowing the exemption of Rs.8,90,66,252/- as claimed exempted by assessee being long term capital gains on securities on which STT was paid. During the period appellant company earned long term capital gain on equity shares (STT) and equity oriented Mutual Funds (STT) of Rs.8,90,66,252/- and a loss of Rs.7,64,406/- on debt oriented Mutual funds (without STT) resulting into a net Long term capital gain of Rs. 8,83,01,846/-. Following is the summary of same- Particular Amount Long term capital gain on Equity Shares and Equity oriented Mutual funds (STT) 8,90,66,252/- (Less)- Long term Capital Loss on Debt oriented Mutual funds (Without STT) (7,64,406) Net Long term Capital Gain 8,83,01,846/- 4.1 The Learned Assessing Officer misunderstood the fact of the case and has erroneously stated at point no.6.6 (Page No.15) of the assessment order that \"In the absence of evidence to prove that the Long Term Capital Gains Printed from counselvise.com ITA No. 3010 /Del/2024 Vireet Investments Pvt. Ltd. 6 claimed exempt u/s 10(38) is only from transfer of \"an equity shares in a company or a unit of an equity oriented mutual funds\" the amount of Rs.8, 90,66,252/- is to be assessed as the income of the assessee from other sources.\" 4.2 In this regard, it is submitted before your Honour that at no time during the assessment proceedings, the Learned Assessing Officer had asked specifically to provide evidence that the Long Term Capital Gains is from the transfer of a Equity shares of a company or from unit of a Equity oriented mutual funds. 4.3 While on the above, it is further submitted that the details provided for Capital Gains at the time of filing the Income Tax Return clearly stated Long term Gains on securities — STT. (Please refer page no.102 to page no. 125 of the paper book). Thus, it was very clear that Securities Transactions Tax (SU) has been paid on the securities. STT is payable only on equity shares or equity oriented mutual funds. 4.4 Without prejudice to above, even during assessment proceedings the Learned AO had asked for details of exempt income and while giving the details of exempts income, it had again been shown clearly that mutual funds / shares were subject to STT. (Please refer to page no. 126 to page no 127of the paper book). 4.5 Further, the details submitted on November 6, 2009 for Capital Gains suggested individual names of the shares/all the funds which clearly reflected that they were equity shares or equity oriented mutual funds. (Please refer to page no.128 to page no 167 of the paper book). 4.6 The gains on shares and Equity oriented mutual funds had separately been dealt by the assessee himself as is apparent from the return of income filed. 4.7 Without prejudice to above, it is further submitted that to verify the correctness of the claim of the assessee, the Assessing Officer had asked for the broker's contract notes for sale & purchase of shares and the same was done on Test Check Basis. The contract notes clearly provided that the shares were traded on stock Printed from counselvise.com ITA No. 3010 /Del/2024 Vireet Investments Pvt. Ltd. 7 exchange and the assessee is entitled for exemption for Long term Capital Gains u/s 10(38) of the Income Tax Act, 1961. 4.8 The details of Long term Capital Gains along with one contract note for each script as well as the statement of equity oriented mutual funds along with their offer document had been submitted earlier during the course of physical hearing. The same are attached herewith on sample basis to avoid repetition from Page no. 128 to 167of the paper book. 4.9 Further Ld. Assessing officer has also stated that the assessee has received the dividend from 7 to 8 days of purchase of funds and therefore Section 94 should be invoked. 4.10 In this regard we wish to submit that provisions of Section 94(7) can only be applicable on the short term capital loss. However, the issue we are dealing is of long term capital gains, therefore, provisions of section 94(7) cannot be invoked here and further the Ld. Assessing officer has specifically made an addition of Rs.3,18,320/- u/s 94(7) which the appellant has accepted and has not appealed against the same. 4.11 Your honour is hereby requested to delete the addition as made by the Learned Assessing Officer and provide justice to the assessee.” [Emphasis supplied] 6. The issue of disallowance of exemption under section 10(38) of the Act was decided by the Ld. CIT(A) in favour of the assessee as under: - “5.4 I have carefully considered the appellant submissions and Assessment Order. It is a fact on the record that Ld. Assessing Officer has made the addition of Rs.8,90,66,252/- under the head income from other sources as the assessee has failed to prove that the Long Term Capital Gain claimed as exempt under section 10(38) of the Income Tax Act is only from transfer of “an equity share in a company or unit of an equity oriented mutual fund”. In this regard, the appellant has contended that on facts and consideration of the case and in law, the Learned Assessing Officer had erred in not allowing the exemption of a sum of Rs.8,90,66,252/- being the income exempt u/s 10(38) of the Income Tax Act, 1961. Printed from counselvise.com ITA No. 3010 /Del/2024 Vireet Investments Pvt. Ltd. 8 5.4.1 In this regard, the appellant has contended that at no time during the assessment proceedings, the Learned Assessing Officer had asked specifically to provide evidence that the Long Term Capital Gains is from the transfer of an Equity shares of a company or from unit of a Equity oriented mutual funds and further while on the above, it is further submitted that the details provided for Capital Gains at the time of filing the Income Tax Return clearly stated Long term Gains on securities -STT. 5.4.2 In the same way, the appellant has contended that without prejudice to above, even during assessment proceedings the Learned AO had asked for details of exempt income and while giving the details of exempts income, it had again been shown clearly that mutual funds / shares were subject to STT. Further, the details submitted on November 6, 2009 for Capital Gains suggested individual names of the shares / all the funds which clearly reflected that they were equity shares or equity oriented mutual funds. 5.4.3 Further, the appellant has contended that without prejudice to above, it is further submitted that to verify the correctness of the claim of the assessee, the Assessing Officer had asked for the broker's contract notes for sale & purchase of shares and the same was done on Test Check Basis. The contract notes clearly provided that the shares were traded on stock exchange and the assessee is entitled for exemption for Long term Capital Gains u/s 10(38) of the Income Tax Act, 1961. 5.4.4 Further, the appellant has contended that the details of Long term Capital Gains along with one contract note for each script as well as the statement of equity oriented mutual funds along with their offer document had been submitted earlier during the course of physical hearing. The same are attached herewith on sample basis to avoid repetition. 5.4.5 Further, in remand report dated 19-01-2012 submitted by the Ld. AO and in this regard, the Ld. Assessing Officer has contended that in this case an addition of Rs.8,90,66,252/- was made u/s 10(38) in the absence of the assessee to prove the long term capital gain in only from transfer of equity shares in a company or a unit of an equity oriented fund. The Ld. Assessing officer has further contended that as the dividend income is received mostly within seven to eight days of purchase and is mostly received to funds other than equity oriented funds, hence as per provision of section 10(38) was rightly taxed as income from other sources. Printed from counselvise.com ITA No. 3010 /Del/2024 Vireet Investments Pvt. Ltd. 9 Analysis with regard to the Long Term Capital Gain claimed as exempt under section 10(38) of the Income Tax Act: 5.4.6 In this case, the appellant has filed relevant details with respect to Long term Capital Gain from transfer of an equity share in a company or unit of an equity oriented mutual fund in the shape of a statement showing calculation of Long Term Capital Gain on transfer of an equity share in a company or unit of an equity oriented mutual fund and Contract note of Brokers and statement of account of Equity Oriented mutual funds. On the perusal of the documentary evidence, it is found that in case of transfer of Share, Security Transaction Tax (STT) has been paid on sale of share and in case of transfer of Units, the said units are covered under the Equity Oriented mutual funds. Therefore, the appellant has rightly claimed the exemption under section 10(38) of the Income Tax Act, 1961 and contention of the appellant is found tenable. 5.4.7 The appellant has furnished following statement in the tabular form showing the details of Long term capital gain of Rs.8,90,66,254/- alongwith relevant supporting documents: …………………………………. 5.4.8 Further, provisions of section 10(38) of the Income Tax Act, 1961 are reproduced as under: “Section10 (38) any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund [or a unit of a business trust] where— (a) the transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force; and (b) such transaction is chargeable to securities transaction tax under that Chapter:” 5.4.9 In the instant case, Long term capital gain has been generated on transfer/sale of equity share or a unit of equity oriented funds and the appellant has paid securities transaction tax (STT) on such transfer/sale. Printed from counselvise.com ITA No. 3010 /Del/2024 Vireet Investments Pvt. Ltd. 10 Therefore, the appellant has fulfilled both conditions as mentioned in the provision of Section 10(38) of the Income Tax Act, 1961 and hence, the appellant company has correctly shown Long term capital gain as exempt under section 10(38) of the Act. Analysis with regard to provisions of Section 94(7) of the Income Tax Act, 1961: 5.4.10 In this regard, the appellant has filed rebuttal and contended that Ld. Assessing officer has also stated that the assessee has received the dividend from 7 to 8 days of purchase of funds and therefore Section 94 should be invoked. In this regard, the appellant has contended that provisions of Section 94(7) can only be applicable on the short term capital loss However, the issue we are dealing is of long term capital gain, therefore, provisions of section 94(7) cannot be invoked here and further the Ld. Assessing officer has already made specific addition of Rs.3,18,320/- u/s 94(7) which the appellant has accepted and has not appealed against the same. Therefore, the contention of the Ld. Assessing Officer is not found tenable. 5.4.11 Therefore, after careful consideration of the above narrated facts, circumstances of the case, the submissions of the Appellant, containing direct and cogent evidence conveying that condition under section 10(38) of the Income Tax Act,1961 with regard to equity share and equity oriented mutual funds hence the addition of Rs.8,90,66,252/- under the head income from other sources is hereby deleted and Ld. Assessing Officer is directed to treat the income under the head Long Term Capital Gain as exempt under section 10(38) of the Income Tax Act, 1961 and accordingly ground of the appellant company is allowed.” [Emphasis supplied] 7. Before us, the Ld. CIT(DR) placed reliance on the assessment order and prayed for upholding the finding of the AO as far as taxability of Rs.8,90,66,252/- is concerned. 8. On the other hand, the Ld. Authorized Representative (‘AR’), drawing our attention to the specific findings of the Ld. CIT(A) submitted that the Securities Printed from counselvise.com ITA No. 3010 /Del/2024 Vireet Investments Pvt. Ltd. 11 Transaction Tax (‘STT’) have been paid on all such transactions on transfer of equity shares and units of equity-oriented mutual fund. The Ld. AR contended that the Ld. AO had never called the details/ documents relating to the nature of shares and units of mutual fund. The nature of shares as equity share and units as unit equity oriented mutual fund was first time submitted before the Ld. CIT(A), who remanded the matter back to the Ld. AO, who preferred not to comment on the merit of such evidences. Hence, the Ld. CIT(A), vide above mentioned detailed finding, held that such shares and mutual fund were equity shares and units of equity-oriented funds. Hence, the income derived in the form of LTCG on transfer of such shares and units of mutual fund were eligible for exemption under section 10(38) of the Act. 9. The Ld. AR further submitted that the STT was a kind of financial transaction tax similar to Tax Collected at Source (‘TCS’). It was submitted that the STT is a direct tax levied on every purchase and sale of securities that are listed on the recognized stock exchanges in India. STT is governed by the Securities Transaction Tax Act, and the STT Act has specifically listed down various taxable securities transactions i.e., transactions on which STT is leviable. It was contended that the STT had been paid by the assessee on all such transactions which resulted LTCG of Rs.8,90,66,252/- as STT was only paid on transfer of equity shares & units of equity oriented mutual fund. Hence, all such securities were equity shares & units of equity oriented mutual fund and thus eligible for exemption under section 10(38) of the Act. Printed from counselvise.com ITA No. 3010 /Del/2024 Vireet Investments Pvt. Ltd. 12 The Ld. AR submitted that the revenue had not brought any material to contradict the specific finding of the Ld. CIT(A) that the said shares and units of mutual fund were not equity shares and units of equity oriented mutual fund. The Ld. AR contended that the period of holding had not been disputed only the nature of share whether equity preferential or otherwise had been disputed. The documentary evidences submitted before the Ld. CIT(A) clearly demonstrated that the entire investment made in share and mutual fund where in equity shares and units of equity oriented mutual fund. Hence, he prayed for dismissal of this ground. 10. We have heard both parties and have perused the material available on the record. We find substantial merit in the submissions/arguments/ contentions of the Ld. AR subject to finding herein after. The Revenue has not brought the material on the record to contradict the finding of the Ld. CIT(A) that the shares and mutual funds resulting LTCG of Rs.8,90,66,252/- during the relevant year is derived from transfer of equity shares and units of equity oriented mutual funds. We have taken note of the fact that the entire finding of the Ld. CIT(A) is based on two core facts as under: i. STT is paid on all transactions resulting LTCG of Rs.8,90,66,252/- and ii. Samples of contract notes produced before him show that the share and units are equity shares and units of equity oriented mutual funds. Printed from counselvise.com ITA No. 3010 /Del/2024 Vireet Investments Pvt. Ltd. 13 11. Undisputedly, the ‘taxable securities’ include equity, derivatives, and unit of equity-oriented mutual fund. It also includes unlisted shares sold under an offer for sale to the public included in IPO and where such shares are subsequently listed in stock exchanges. Thus, it does not mean that only on the equity shares and units of equity oriented mutual funds, STT is levied. Further, only part of sample contract notes has been examined by the Ld. CIT(A). Thus, it cannot be ruled out that the assessee has not transferred derivatives and unlisted shares sold under an offer for sale to the public included in IPO and where such shares are subsequently listed in stock exchanges. All these facts need examination in entirety to establish beyond doubt that the assessee has derived LTCG of Rs.8,90,66,252/- on exclusive transfer of equity shares and units of equity oriented mutual funds only. After careful consideration of material on the record in entirety; we, therefore, without commenting on merit of this issue, are inclined to remit this issue to the Ld. AO for deciding it afresh that whether the LTCG of Rs.8,90,66,252/- derived by the assessee are only from transfer of equity shares and units of equity oriented mutual funds. It is hereby clarified that the LTCG derived from exclusive transfer of equity shares and units of equity oriented mutual funds only is held eligible for exemption under section 10(38) of the Act. Accordingly, this issue should be decided by the Ld. AO. Consequently, this ground raised by the revenue stands allowed for statistical purposes as above. Addition of Notional Income of Rs.10,49,768/-: Printed from counselvise.com ITA No. 3010 /Del/2024 Vireet Investments Pvt. Ltd. 14 12. The assessee, one of the promoters of HCL group of company, is a non- banking company engaged in the business of investment in shares and securities and advancing loans etc. It has made advances to various group concerns as detailed hereunder: - S. No. Name of person/Entities Amount of Loan Period of Loan 1. Snam Investment Pvt. Ltd. 15,00,000/- 22.5.2006 to 23.06.2006 2. Subhash Arora Investment(I) Pvt. Ltd. 15,00,000/- 22.5.2006 to 23.06.2006 3. Arora Trading Corporation 12,43,742/- 1.04.2006 to 31.03.2007 4. Daljeet Singh Sahney 26,45,330/- 01.04.2006 to 31.03.2007 5. HCL Office Automation Ltd. 24,09,000/- 1.4.2006 to 31.03.2007 6. HMS Puri HUF 11,00,000/- 1.4.2006 to 31.03.2007 7. Jusvider Puri 5,00,000/- 1.4.2006 to 31.03.2007 8. Ravinder Sahni 6,00,000/- 1.4.2006 to 31.03.2007 13. These advances were interest free, therefore, the Ld. AO observing as under worked out interest of Rs.10,49,768/- on notional basis @ 12% per annum on the said advances for the relevant year: - “5. The explanation of the assessee is not acceptable since the assessee has failed to prove or furnish any evidence in support of its contention that the entities / persons to whom these loans have been given are subsidiaries. Secondly, as discussed above the assessee being an NBFC Company, the main objectives of the company is to advanced loans. As stated by the assessee itself these advances / loans are considered good and therefore not considered doubtful. CBDT circular dated 28-06- Printed from counselvise.com ITA No. 3010 /Del/2024 Vireet Investments Pvt. Ltd. 15 1978 and the decision of the Hon'ble Kerla High Court in the case of State Bank of Travancore Vs. CIT 110 ITR pg. 336 (Kerala) support the stand that interest on loan is taxable in the case of the assessee which is engaged in the business of money lending. In the aforesaid case, in respect of the assessee, a banking company, did not credit in its accounts the interest that had accrued on sticky advances because the assessee felt that the interest may not be paid. It credited the interest to a separate account known as \"Interest Suspense Account\". On reference it was held on the facts, that there was an accrual income liable to Income Tax and the assessee was not justified in not crediting the interest accrued on such sticky advances in its accounts. 6. The assessee has failed to justify and explain as to why interest has not been charged from the various parties / entities to whom it has given loans and advances. Accordingly, interest @ 12% per annum is charged and added to the income of the assessee as its interest income as per computation below: ……….. ………. Accordingly, an amount of Rs.10,49,768/- is deemed to be the interest income of the assessee from the loans and advances given during the relevant financial year to various persons / entities. (Addition of Rs.10,49,768/-)” 14. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who placing reliance on the ITAT (Special Bench) decision in the case of assessee in ACIT vs. Vireet Investment Pvt. Ltd. 2017-TIOL-923 ITAT Del-SB order dated 16.06.2017 deleted the said addition. Later, the ITAT (Special Bench) decision was upheld by the Hon’ble Delhi High Court. 15. Before us, the Ld. CIT-DR placed reliance on the finding of the AO and defended the assessment order. Printed from counselvise.com ITA No. 3010 /Del/2024 Vireet Investments Pvt. Ltd. 16 16. On the other hand, the Ld. AR submitted that this issue was squarely covered by the decision of the Hon’ble High Court and Special Bench of the Tribunal in assessee’s own case. Hence, the addition needed to be deleted. 17. We have heard both parties and have perused the material available on record. We find merit in the submissions/arguments/contentions of the Ld. AR that this issue is squarely covered by the decision of the Hon’ble High Court and ITAT (SB) as mentioned above. Respectfully following the said orders, we find no infirmity in the impugned order. Hence, we decline to interfere with the finding of the Ld. CIT(A) in this regard. Consequently, this ground of Revenue stands dismissed. 18. In the result, the appeal of Revenue is partly allowed as boave for statistical purpose. Order pronounced in open Court on 14th November, 2025 Sd/- Sd/- (YOGESH KUMAR U.S.) (AVDHESH KUMAR MISHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:14/11/2025 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT/PCIT 4. CIT(Appeals) 5. Sr. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "