DY. COMMISSIONER OF INCOME TAX, CENTRAL DELHI V. THREE C RESIDENCY PRIVATE LIMITED, SOUTH DELHI

ITA 2113/DEL/2025

AI Insights

The case involves Three C Residency Pvt. Ltd., a company engaged in real estate, which appealed against the order of the Commissioner of Income Tax (Appeals) - 24, New Delhi. The primary issue was the invocation of Section 68 of the Income Tax Act by the Assessing Officer (AO), which considered certain entries as unexplained. The assessee had capitalized interest and lease rent payable to YEIDA under Capital Work-In-Progress (CWIP), which the AO contested. However, the CIT(A) and the Tribunal found that the assessee had adequately explained the entries and that there was no cash credit entry at the time of increase in closing stock of CWIP, thus not invoking Section 68.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 790612 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2018-2019
• Appeal Filed On: 30-03-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROHIT KAPOOR; ITP VIRSAIN AGGARWAL
• Assessee Lawyers: MAHESH KUMAR
• Keywords: Additional evidence; Unexplained cash credit
• Section: 143(3); 68

Judgement Text

"P a g e | 1 ITA No.2113/Del/2025 Three C Residency Pvt. Ltd. (AY: 2018-19) IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER & SHRI MANISH AGARWAL, JUDICIAL MEMBER ITA No. 2113/Del/2025 (Assessment Year:2018-19) DCIT E-2, ARA Centre, Jhandewalan Delhi – 110055 Vs. Three C Residency Private Limited , C-23, Greater Kailash Enclave, Part-1, Delhi – 110048 \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No: AAECT0622Q Appellant .. Respondent Appellant by : Rohit Kapoor, & ITP Virsain Aggarwal Respondent by : Sh. Mahesh Kumar, CIT, DR Date of Hearing 17.09.2025 Date of Pronouncement 05.12.2025 O R D E R PER ANUBHAV SHARMA, JM: This appeal is preferred by the Revenue against the order dated 14.01.2025 of the Ld. Commissioner of Income Tax (Appeal)-24, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) Printed from counselvise.com P a g e | 2 ITA No.2113/Del/2025 Three C Residency Pvt. Ltd. (AY: 2018-19) in Appeal No. CIT(A), Delhi-24/10279/2017-18 arising out of the order dated 31.05.2021 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the ACIT, Central Circle-6, Delhi for AY: 2018- 19. 2. On hearing both the sides, we find that assessee is a part of real estate group engaged in housing projects and was granted a group housing plot by the Yamuna Expressway Industrial Development Authority (YEIDA) through a lease deed dated 17.02.2012. The assessee was required to pay lease deed against this on a condition that if there is an outstanding balance beyond the installment period YEIDA will charge 12.5% per annum as interest. The case of the assessee is that these terms were revised and a penal interest of 1.5% per annum was added thereby making the total interest rate 14% in case of delay or default in payment. The assessee has computed interest payable by applying rate of 14% per annum of total impugned outstanding as on 31.03.2017 and in its account assessee has shown principle amount as a long term liability and the interest on lease rent payable was shown as a trade payable. The case of the assessee is that this accounting treatment was carried out in accordance with applicable accounting standards. Assessee capitalized Printed from counselvise.com P a g e | 3 ITA No.2113/Del/2025 Three C Residency Pvt. Ltd. (AY: 2018-19) the interest and lease rent payable during the Financial Year 2017-18 under Capital Work-In-Progress (CWIP). 3. However, ld. AO invoked Section 68 of the Act considering this to be unexplained and as the matter reach the stage of First Appeal, additional evidences application under Rule 46A was filed on which remand report was sought and the ld. AO had submitted that evidences were not filed in the assessment proceedings. However, on merits, capitalization of interest to Capital Work In Progress (CWIP) was not disputed. 4. After going through the impugned order of Ld. CIT(A), we find that additional evidences were forwarded to AO and after taking comprehensive remand report the same was admitted and became the substratum of the decision as Ld. CIT(A) concluded that assessee had explained by letter dated 06.06.2022 that this entry is related to loan installment to be paid to YEIDA along with related interest as installment could not be paid in due times. Ld. CIT(A) also appreciated that there was a mere journal entry and no cash credit entry existed at the time of increase in closing stock of CWIP to Printed from counselvise.com P a g e | 4 ITA No.2113/Del/2025 Three C Residency Pvt. Ltd. (AY: 2018-19) conclude that Section 68 of the Act could not have been invoked and deleted the same. 5. The Ld. DR although tried to defend the case on the basis that assessee had failed to file necessary evidences at the assessment proceedings, however, given facts and circumstances discussed above including the extensive remand report submitted by the AO wherein on merits the case of the assessee has not been disputed, we find no substance in the grounds as raised. There is nothing to indicate any unexplained credit entry for making addition u/s 68 of the Act. The appeal of the department is dismissed. Order pronounced in the open court on 05.12.2025 Sd/- (Manish Agarwal) Sd/- (Anubhav Sharma) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 05.12.2025 Rohit, Sr. PS Printed from counselvise.com P a g e | 5 ITA No.2113/Del/2025 Three C Residency Pvt. Ltd. (AY: 2018-19) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "