Dismissed¶32

C.I.T v. M/S Escorts Ltd.

Delhi HC27 Apr 2026ITA/1427/2006

Case brief

AI extract

What is this about?

ITA 1427/2006, High Court of Delhi, order dated 27.04.2026; C.I.T (appellant; Sr SC Sunil Agrawal) v. M/s Escorts Ltd. (respondent); Income Tax Act, 1961 — Section 2(24)(iv), Section 14A; ITAT order dated 27.11.2018 confirming CIT(Appeals) deletions; substantial questions of law; concurrent findings of fact; no perversity; no substantial question of law arises; appeal rejected; amounts in dispute: Rs.1,71,30,343/-, Rs.10,37,275/-, Rs4.56 crores, Rs.2,01,88,412/-, Rs41,48,896/-; coram: Dinesh Mehta J. and Vinod Kumar J.

What did the court decide?

On question (i), learned counsel for the appellant informed the Court that the amount of Rs.1,71,30,343/- (Section 2(24)(iv)) has been taxed in the subsequent year 2006-07 and the assessee has paid the requisite tax. ¶24

C.I.T Vs M/S Escorts Ltd. — Income Tax | Delhi HC (2026)

What the court decided

AI extract

Outcome

Dismissed

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Issue for consideration

Whether the Income Tax Appellate Tribunal was correct in law in holding and confirming the deletion of addition of Rs.1,71,30,343/- made by the Commissioner of Income Tax (Appeals) under Section 2(24)(iv) of the Income Tax Act, 1961. +4 more

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Court's answer

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Ratio / Principle

In view of the subsequent development (taxation of the amount in 2006-07 and payment of tax), the appeal qua question no.(i) is rejected.

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Key takeaways

On questions (ii) to (v), the Court finds no perversity in the findings recorded by the Commissioner of Income Tax (Appeals), which have been affirmed by the Tribunal; the matters rest on concurrent findings of fact and no substantial question of law arises for consideration; the appeal qua questions (ii) to (v) is therefore rejected.ratio¶31
The appeal is rejected in its entirety.ratio¶32

Detailed headnote1 paragraphs

High Court of Delhi (Dinesh Mehta & Vinod Kumar, JJ.), order dated 27.04.2026 in ITA 1427/2006 — C.I.T (Appellant) v. M/s Escorts Ltd.: The appeal, admitted on five substantial questions of law arising from the Tribunal's order dated 27.11.2018 confirming the CIT(Appeals)'s deletions, is rejected. Question (i) (deletion of addition of Rs.1,71,30,343/- under Section 2(24)(iv) of the Income Tax Act, 1961) fell away because the amount was taxed in the subsequent year 2006-07 and the requisite tax paid. On questions (ii)-(v) — capitalisation of expansion/diversification expenditure of Rs.10,37,275/-; interest-free loan of Rs.4.56 crores to M/s Escotrac & Investment Ltd.; Section 14A disallowance of Rs.2,01,88,412/-; and product-development expenditure of Rs.41,48,896/- treated as capital — the Court held there was no perversity in the findings of the CIT(Appeals) affirmed by the Tribunal, the matters resting on concurrent findings of fact, and that no substantial question of law arose.

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$~16

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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- ITA 1427/2006

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C.I.T .....Appellant

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Through: Mr. Sunil Agrawal, Sr SC with Ms Priya Sarkar, Mr Viplav Acharya, Jr SCs, Mr. Utkarsh Tiwari and Anugrah Dwivedi, Advs.

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versus

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M/S ESCORTS LTD .....Respondent

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Through: Mr. Simran Mehta and Mr. ARchit Vashistha, Advs.

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CORAM:

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HON'BLE MR. JUSTICE DINESH MEHTA HON'BLE MR. JUSTICE VINOD KUMAR

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O R D E R

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% 27.04.2026

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The appeal was admitted on the following substantial questions of

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law:-

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“(i) Whether the Income Tax Appellate Tribunal was correct in law in holding and confirming the deletion of addition of Rs.1,71,30,343/- made by the Commissioner of Income Tax (Appeals) under Section 2(24)(iv) of the Income Tax Act, 1961?

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(ii) Whether the Income Tax Appellate Tribunal was correct in law in holding and confirming the deletion of addition of Rs.10,37,275/- made by the Commissioner of Income Tax (Appeals) on account of disallowance of expenditure for

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Page 1 of 3

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This is a digitally signed order.

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The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/04/2026 at 13:02:00

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expansion and diversification of the business of the Assessee by treating the expenses as capital expenses and reversing the view of the Assessing Officer?

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(iii) Whether the Income Tax Appellate Tribunal was correct in law in holding and confirming the deletion of Rs4.56 crores made by the Commissioner of Income Tax (Appeals) on account of interest free loan advanced to M/s Escotrac & Investment Ltd. by the Assessee?

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(iv) Whether the Income Tax Appellate Tribunal was correct in law in holding and confirming the deletion of addition of Rs.2,01,88,412/- by the Commissioner of Income Tax (Appeals), which was disallowed by the Assessing Officer under Section 14A of the Income Tax Act, 1961?

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(v) Whether the Income Tax Appellate Tribunal was correct in law in holding and confirming the deletion of addition of Rs41,48,896/- by the Commissioner of Income Tax (Appeals) on account of disallowance of expenditure for development of existing products by treating the expenditure as capital expenditure?”

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So far as question no.(i) in relation to deletion of addition of Rs.l,71,30,343/- made under Section 2(24)(iv) of the Income Tax Act, 1961 ( hereinafter referred to as ‘the Act of 1961’ ) is concerned, learned counsel for the appellant informs that this particular amount has been taxed in subsequent year 2006-07 and the assesse has paid requisite tax.

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In view of the subsequent development, the appeal qua this question no.(i) is rejected.

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Page 2 of 3

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This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/04/2026 at 13:02:00

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Advancing arguments qua question no. (ii) to (v), Mr. Sunil Agrawal, learned Senior Standing Counsel for the appellant relied upon the Tribunal’s order dated 27.11.2018 and findings recorded therein to argue that the Tribunal has not properly appreciated the facts.

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Learned counsel for the respondent, on the other hand, argued that question no. (ii) to (v) essentially emanate out of evidence and is based upon pure findings of facts which have been concurrently recorded by two Appellate Authorities (i.e. CIT and the Tribunal) and no question of law arises.

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Having heard learned counsel for the parties and considering that the Tribunal has confirmed the deletion of the addition of Rs.10,37,275/- in relation to disallowance of expenditure for expansion and diversification; Rs. 4.56 being interest fee/loan advanced to Escorts Ltd. and Investment Ltd. and disallowance made by the AO under Section 14A of the Act of 1961.

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We do not find any perversity in the findings recorded by the Commissioner of Income Tax (Appeals) and which have been affirmed by the Tribunal. According to us, no substantial question of law arises for our consideration. The appeal qua question no. (ii) to (v) is also therefore rejected.

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