From Challenge to Triumph: Pitti Engineering Wins Huge Tax Appeal Battle in Hyderabad

Image Source: Pitti

Pitti Engineering Ltd has recently been delivered a significant positive verdict in its ongoing income tax litigation. The Commissioner of Income Tax (Appeals)-12, Hyderabad, on 19th August 2025, ruled in favor of the Company, marking a major development in the tax dispute originally initiated in 2019. This ruling removes a substantial disputed demand that had an impact on the Company’s financial disclosures for multiple years and signals a favorable resolution after several years of legal proceedings.

Key Highlights of the Litigation and Recent Development:

1) Background of the Appeal

The appeal was originally filed by Pitti Engineering Ltd on 21st January 2020.
It challenged an order dated 29th December 2019 issued by the Assessing Officer (AO) for the Assessment Year 2017-18.
The AO’s order included certain unsecured loans received by the Company from a few parties as income, thereby increasing the taxable income.
The disputed demand amount involved was a substantial ₹ 923.08 lakhs.
This demand was appropriately disclosed in the Company's Standalone and Consolidated Financial Statements starting from the fiscal year 2019-20.

2) The Authority and Legal Proceedings

The appeal was heard by the Commissioner of Income Tax (Appeals) (CIT Appeals) -12, Hyderabad.
The CIT Appeals authority examined the details of the appeal and the supporting documents submitted by the Company.

3) Outcome of the Appeal

The order dated 19th August 2025 was received and downloaded from the income tax portal on 20th August 2025.
The ruling favored Pitti Engineering Ltd by deleting the additions made by the Assessing Officer.
Essentially, the Commissioner upheld the Company's stance that the unsecured loans should not have been treated as taxable income.
This favorable decision nullifies the disputed demand of ₹ 923.08 lakhs against the Company for the assessment year 2017-18.

Implications and Significance:

Financial Clarity: The ruling brings clarity and relief from the tax demand that has been part of the Company’s financial liabilities for several years.

Impact on Financial Statements: Since this disputed demand found disclosure in financial statements from FY 2019-20, the deletion of such demand could improve the Company’s financial position and tax-related liabilities in future disclosures.

Strengthens Confidence: This legal victory strengthens investors' and stakeholders' confidence by resolving a long-standing tax dispute favorably.

Legal Precedent: The ruling sets a noteworthy precedent on the treatment of unsecured loans in income tax assessments and appeals.

Summary:

Pitti Engineering Ltd’s recent success in the income tax appeal before the Commissioner of Income Tax (Appeals)-12, Hyderabad, marks a crucial win by overturning an adverse assessment that included unsecured loans as taxable income. The disputed tax demand of ₹ 923.08 lakhs for AY 2017-18 has been effectively nullified, ending years of uncertainty over this matter. This development will positively influence the Company's financial health and regulatory compliance framework going forward.

Source: Company Disclosure to the Stock Exchanges

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