INCOME TAX OFFICER, MORIGAON V. PROGRESSIVE FERTICHEM PRIVATE LIMITED, JAGIROAD

ITA 114/GTY/2025

AI Insights

The case involves an appeal by the revenue against the order of the CIT(A), National Faceless Appeal Centre, Delhi, concerning the assessment year 2017-2018. The primary issues in the appeal included the deletion of disallowance of interest on loans from directors, the deduction of VAT remission from the eligible business claim under section 80IE, and the treatment of interest on fixed deposits as profits of the eligible business under section 80IE. The tribunal found that the CIT(A) had correctly applied the law and facts in each instance, leading to the dismissal of the revenue's appeal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 833875 (ITAT-GUWAHATI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 12-05-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANTOSH KARNANI
• Assessee Lawyers: KISHOR JAIN
• Keywords: Earning of tax free income; Bogus

Judgement Text

" आयकर अपीलीय अधिकरण, गौहाटी न्यायपीठ,गुवाहाटी IN THE INCOME TAX APPELLATE TRIBUNAL GAUHATI BENCH, GUWAHATI BEFORE SHRI GEORGE MATHAN, JM & SHRI LAXMI PRASAD SAHU, AM (THROUGH : VIRTUAL HEARING) आयकर अपील सं./ITA No.114/GTY/2025 (नििाारण वर्ा / Assessment Year :2017-2018) ITO Ward-Morigaon & TPS, Marigaon, Assam-782105 Vs. Progressive Fertichem Pvt ltd Nizarapar Road, Near Lions Club, Jagiroad, Morigaon, Marigaon, Assam-782410 PAN No. : AAECP 1451 B (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) निर्ााररती की ओर से /Assessee by : Shri Kishor Jain, FCA राजस्व की ओर से /Revenue by : Shri Santosh Karnani, Sr. DR सुिवाई की तारीख / Date of Hearing : 04/02/2026 घोषणा की तारीख/Date of Pronouncement 04/02/2026 आदेश / O R D E R Per George Mathan, JM: This is an appeal filed by the revenue against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 06.03.2025 for the assessment year 2017-2018. 2. It was submitted by the Ld.Sr DR that the first issue was against the action of the Ld. CIT(A) in deleting the disallowance of the interest on the loans granted by the directors of the assessee’s company for the purpose of the business of the assessee which has been used by the assessee’s company in a manufacturing process and thereby higher profits have been earned on which the benefit of deduction u/s.80IA of the Act has been claimed. It was submission that this is the manipulation which has been Printed from counselvise.com ITA No.114/GTY/2025 2 done by the assessee’s company for gaining higher exempt income in the hands of the company. It was the submission that the AO categorically found that the assessee company had taken loans from the directors at low rates of interest than the market rate and consequently the AO had applied the market rate of interest and the consequential interest computed was reduced from the deduction granted to the assessee u/s.80IA of the Act. It was the submission that the Ld.CIT(A) has by a cryptic order granted the said relief by deleting the addition. 3. In reply, the Ld.AR on behalf of the assessee supported the order of the CIT(A). 4. We have considered the rival submissions. A perusal of the assessment order shows that the AO has in pages 4 to 11 of the assessment order computed the interest on the loans granted by the directors Shri Kartik Dey and the lower interest paid to Shri Piyush Kanti Dey on the ground that the interest was less than what was charge by the SBI to the assessee’s company on the CC account taken by the company. In page 13 of the assessment order the AO computes the said interest rate Rs,2,14,74,100/- and has reduced the same from the assessee’s claim of deduction u/s.80IA of the Act. A perusal of the order of the Ld.CIT(A) in page 12 & 13 shows that the Ld.CIT(A) has considered these facts when he has deleted the addition. A further perusal also shows that there is no bar in the directors of the assessee’s company providing interest free loans or lower interest loans to the assessee’s company. Obviously, the directors of the company are interest in the higher profitability of the business Printed from counselvise.com ITA No.114/GTY/2025 3 company and has consequently given the said loans. The loans have not been claimed to be bogus or given for non business purposes. This being so, we find no reason to interfere in the order of the Ld.CIT(A) on this issue. 5. In regard to the second issue the Ld.Sr.DR submitted that this was against the deduction of the VAT remission from the eligible business claim of 80IE of the Act. 6. A perusal of the order of the Ld.CIT(A) shows that the Ld.CIT(A) has considered the facts that issue was covered by the decision for the assessment year 2013-14. Consequently, we find no reason to interfere in findings of the Ld.CIT(A) on this issue. 7. In regard to the third issue, it was submission that the issue was against the addition of Rs.3,71,503/- representing the interest on the fixed deposits which was treated as the profits of the eligible business claimed u/s.80IE of the Act. 8. A perusal of order of the Ld.CIT(A) shows that the said fixed deposits were given as bank guarantee for participating in the tender for supply of goods to Government Departments. As these fixed deposits were required for tendering and the manufacturing business purpose of the assessee the Ld.CIT(A) has treated the same as being legible for the deduction u/s.80IE of the Act. We find no defect in the order of the Ld.CIT(A) on this issue and consequently we uphold the same. Printed from counselvise.com ITA No.114/GTY/2025 4 9. In the result, the appeal of the revenue stands dismissed. Order dictated and pronounced in the open court on 04/02/2026. (LAXMI PRASAD SAHU) (GEORGE MATHAN) लेखा सदस्य / ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER गुवाहाटी Guwahati; दििांक Dated 04/02/2026 प्र.क ु.मि/PKM, Senior Private Secretary आदेश की प्रनिललपप अग्रेपर्ि/Copy of the Order forwarded to : . आदेशािुसार/ BY ORDER, (Assistant Registrar) आयकर अपीलीय अधिकरण, गुवाहाटी / ITAT, Guwahati Date Initial 1. Draft dictated on 04.02.26 Sr.PS 2. Draft placed before author 04.02.26 Sr.PS 3. Draft proposed & placed before the second member JM/AM 4. Draft discussed/approved by Second Member. JM/AM 5. Approved Draft comes to the Sr.PS/PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. File sent to the Bench Clerk Sr.PS 8. Date on which file goes to the OS 9. Date on which file goes to the AR 10. Date of dispatch of Order. 1. अपीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), Guwahati 4. आयकर आयुक्त / CIT 5. ववभागीय प्रनतनिधर्, आयकर अपीलीय अधर्करण, िुंबई / DR, ITAT, Guwahati 6. गार्ा फाईल / Guard file. सत्यावपत प्रनत //True Copy// Printed from counselvise.com "