FORTUNE METALS TRADING PRIVATE LIMITED,MUMBAI V. ACIT 3(1)(2), AAYKAR BHAWAN

ITA 4610/MUM/2025

AI Insights

The case involves Fortune Metals Trading Private Limited, which appealed against the order of the Commissioner of Income Tax (Appeals) confirming the addition of Rs. 17,14,39,723 to the income under Section 68 of the Income Tax Act, 1961, and the disallowance of interest expenses of Rs. 45,36,998. The additions were initially made by the Assessing Officer during the scrutiny assessment of the assessee's return for the assessment year 2013-14. The Tribunal examined the documentary evidence and the submissions made by both parties, ultimately finding in favor of the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775764 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 19-07-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK PERAMPURNA; DR
• Assessee Lawyers: MANI JAIN; AR
• Section: 68; 133(6)

Judgement Text

" | | | | आयकर अपीलीय अिधकरण ा यपीठ, मुंबई | | | | IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER & SHRI ANIKESH BANERJEE, HON’BLE JUDICIAL MEMBER I.T.A. No. 4610/Mum/2025 Assessment Year: 2013-14 Fortune Metals Trading Private Limited Office No. 201, Loha Bhavan P.D. Mellow Road Carnac Bunder Masjid Mumbai - 400009 [PAN: AABCF9791M] Vs ACIT, 3(1)(2) अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Mani Jain, A/R Revenue by : Shri Vivek Perampurna, CIT D/R सुनवाई की तारीख/Date of Hearing : 04/09/2025 घोषणा की तारीख /Date of Pronouncement : 10/09/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dated 27/05/2025 by NFAC, Delhi {hereinafter “the ld. CIT(A)”} pertaining to AY 2013-14. 2. The grievance of the assessee read as under:- “1. On the facts and in the circumstances of the case and in law, the Commissioner of Income Tax erred in confirming the addition of Rs. 17,14,39,723/- to the income under Section 68 of the Income Tax Act, 1961, without giving due consideration to the submissions made by the assessee and without proper appreciation of the material facts of the case.\" 2. On the facts and in the circumstances of the case and in law, the Commissioner of Income Tax erred in upholding the disallowance of interest expenses of Rs. 45,36,998/- paid by the Appellant on loans utilized for acquiring income-generating rental property, having failed to properly appreciate the nexus between the borrowed funds and the income-earning asset. 3. assessee/appellant craves leave to add/alter/modify any/all grounds of appeal.” Printed from counselvise.com I.T.A. No. 4610/Mum/2025 2 3. Briefly stated the facts of the case are that the assessee filed its return of income on 29/09/2013 declaring total income at Rs. 44,14,610/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. While scrutinizing the return of income, the AO noticed that the assessee has purchased a premise being Floor No 1, 2, 3 of Phase I and 4h Floor of Phase II and 5th Floor situated in 'Lodha Excelus', N.M Joshi Marg, Chinchpokli, Mumbai 400011. The AO found that the said property is leased out to KPMG from whom assessee is earning \"income from House Property'. The AO further found that the assessee has received unsecured loans from Amit Kumar Jain amounting to Rs. 61,61,053/- and from Tirupati Power Infra Projects Pvt Ltd. Rs. 2,82,78,670/- and has also received share application money from the same company at Rs. 13,70,00,000/-. The borrowed funds were utilized for purchasing the aforementioned immovable property. The assessee was asked to explain the credit entries mentioned hereinabove in the light of Section 68 of the Act. The assessee furnished necessary details explaining the identity, genuineness of the transactions and capacity, discharging the initial onus cast upon it by the provisions of Section 68 of the Act. The submissions of the assessee were dismissed by the AO who concluded by holding that the assessee has failed to discharge the onus and completed the assessment proceedings by making addition of Rs. 17,14,39,723/- u/s 68 of the Act which also included additions of Rs. 45,36,998/- being interest claimed on the unsecured loans mentioned hereinabove. The assessee carried the matter before the ld. CIT(A) but without any success. 4. Before us, the ld. Counsel for the assessee reiterated what has been stated before the lower authorities and referred to the documentary evidence which were furnished before the lower authorities to Printed from counselvise.com I.T.A. No. 4610/Mum/2025 3 demonstrate that the assessee has successfully discharged the initial onus cast upon it by the provisions of Section 68 of the Act. Per Contra, the ld. D/R strongly supported the findings of the AO. 5. We have carefully considered the orders of the authorities below. Insofar as the borrowings from Amit Kumar Jain is concerned, he is one of the Directors of the assessee company, therefore, identity is unquestionable. His ITRs are placed on record along with confirmation of copy of ledger account. From the bank statement of Amit Kumar Jain, we find that he had a clear balance of Rs. 25,14,278/- on 30/07/2012, out of which he gave loan to the assessee Rs. 25,00,000/- through RTGS. We further find from his bank account that he had clear balance of Rs. 25,90,488/- on 19/07/2012 out of which he gave loan to the assessee. In fact the loans given by Amit Kumar Jain are clearly reflected in his bank statements where he was having clear balance to give the impugned loan. Therefore, we are of the considered view that the assessee has successfully discharged the onus cast upon it by the provisions of Section 68 of the Act insofar as the loan from Amit Kumar Jain is concerned. 5.1. Insofar as the loan from Tirupati Power Infra Projects Pvt. Ltd., is concerned, during the course of assessment proceedings itself, the assessee clarified that inadvertently Rs. 13.70 Crores have been shown as share application money but the same is unsecured loan. Along with the unsecured loan of Rs. 2,82,78,670/-. The AO issued notice u/s 133(6) of the Act to the lender company asking it to give details of PAN, copy of ITR along with audited financial accounts and the details of loans given to the assessee from AY 2011-12 to AY 2014-15 along with certified copy of ledger accounts, the details sought by the AO from Tirupati Power Infra Projects Pvt Ltd. Printed from counselvise.com I.T.A. No. 4610/Mum/2025 4 5.1.1. Subsequently, vide letter dated 16/03/2016, the AO of Tirupati Power Infra Projects Pvt Ltd., was asked to filed details available in case records in respect of the said company and the AO of Tirupati Power Infra Projects Pvt Ltd., filed details as sought by the AO. Though the AO of Tirupati Power Infra Projects Pvt Ltd., made his reservation insofar as the financials of the company is concerned but we have the benefit of the assessment order in the case of Tirupati Power Infra Projects Pvt Ltd. dated 31/03/2016 which is subsequent to the impugned assessment order of Tirupati Power Infra Projects Pvt Ltd.. The AO has accepted the financials of the assessee company and the returned income was assessed as such. 6. Considering the material facts brought on record in respect of Tirupati Power Infra Projects Pvt Ltd. along with the assessment order of the company, we are of the considered view that the assessee has successfully discharged the identity, genuineness of the transactions and the creditworthiness of the lender company satisfactorily. 7. Considering the facts of the case in totality, we do not find any merit in the impugned additions made u/s 68 of the Act in respect of the unsecured loans from the two parties. The AO is directed to delete the same. Since we have deleted the additions made u/s 68 of the Act, we direct the AO to allow the claim of interest paid on such borrowings. 8. In the result, appeal of the assesse is allowed. Order pronounced in the Court on 10th September, 2025 at Mumbai. Sd/- Sd/- (ANIKESH BANERJEE) (NARENDRA KUMAR BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 10/09/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs Printed from counselvise.com I.T.A. No. 4610/Mum/2025 5 आदेश की \u0015ितिलिप अ\u001aेिषत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. \u0015 थ / The Respondent 3. संबंिधत आयकर आयु\" / Concerned Pr. CIT 4. आयकर आयु\" ) अपील ( / The CIT(A)- 5. िवभागीय \u0015ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड& फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai Printed from counselvise.com "