ITAT adjudicated a dispute involving an Asset Reconstruction ...

Tax Treatment of Security Receipts: Asset Reconstruction Company Wins Case on RBI Guidelines and Accounting Methodology

April 17, 2025

Case Laws     Income Tax     AT

ITAT adjudicated a dispute involving an Asset Reconstruction Company's tax treatment of security receipts. The tribunal held that the assessee correctly followed RBI guidelines by writing off unrealized security receipts after eight years. The ITAT rejected the AO's assessment that trust realizations constituted the assessee's income, drawing parallels with mutual fund investments. The tribunal found no infirmity in the assessee's accounting methodology and directed deletion of protective additions related to upside income. Consequently, the ITAT dismissed the Revenue's appeal, affirming the assessee's tax treatment of security receipts and rejecting unauthorized income additions by the tax authorities.

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