THE PR. COMMISSIONER OF INCOME TAX -CENTRAL -1 vs SPERRY PLAST LTD.

Judgment text excerpt

$~53 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 3rd February, 2026. + ITA 90/2026 & CM APPL. 7272/2026 THE PR. COMMISSIONER OF INCOME TAX -CENTRAL -1 .....Appellant Through: Mr. Ruchir Bhatia, SSC with Mr. Anant Mann, JSC. versus SPERRY PLAST LTD. .....Respondent Through: None. CORAM: HON'BLE MR. JUSTICE DINESH MEHTA HON'BLE MR. JUSTICE VINOD KUMAR JUDGMENT DINESH MEHTA, J. (Oral) 1. The instant appeal under Section 260A of the Income Tax Act 1961 (hereinafter referred to as „Act of 1961‟) impugns the order dated 04.06.2025 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘G’ New Delhi (hereinafter referred to as „the Tribunal‟), whereby the appeal filed by the respondent-assessee was allowed. 2. While allowing the appeal, the Tribunal recorded the following findings:- “9. During the Remand Proceedings, the A.O. made independent enquiries from the above two parties by issuing notice to them. The notice issued by the A.O. has been duly served and both the parties have replied. In so far as Bhargabi Vinimav Pvt. Ltd., the reason assigned for the addition is that the reserve and surplus of the loan creditor was low and the Signature Not Verified Digitally Signed ITA 90/2026 Page 1 of 4 By:NAVEEN KUMAR Signing Date:05.02.2026 12:54:11 loan creditor company had shown meager income. It is well settled law that the loan creditor creditworthiness is not only restricted to the current year income u/s 68 of the Act. What is relevant is the source and such source is not confined to current year income only. The source could be out of many factors such as money paid within its net-worth out of loan raised by them or out of income earned by them. As per the balance sheet of Bhargabi Vinimav Pvt. Ltd. they had availability of total source of fund of Rs. 26,