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
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The appeal was originally filed by Pitti Engineering Ltd on 21st January 2020.
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It challenged an order dated 29th December 2019 issued by the Assessing Officer (AO) for the Assessment Year 2017-18.
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The AO’s order included certain unsecured loans received by the Company from a few parties as income, thereby increasing the taxable income.
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The disputed demand amount involved was a substantial ₹ 923.08 lakhs.
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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
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The appeal was heard by the Commissioner of Income Tax (Appeals) (CIT Appeals) -12, Hyderabad.
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The CIT Appeals authority examined the details of the appeal and the supporting documents submitted by the Company.
3) Outcome of the Appeal
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The order dated 19th August 2025 was received and downloaded from the income tax portal on 20th August 2025.
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The ruling favored Pitti Engineering Ltd by deleting the additions made by the Assessing Officer.
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Essentially, the Commissioner upheld the Company's stance that the unsecured loans should not have been treated as taxable income.
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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
