2023 (10) TMI 784 - HC - Income Tax

Court Upholds Tribunal's Decision: Revenue's Appeal Dismissed, Loan Transaction with Dayal Trust Deemed Genuine, No Legal Questions

The HC upheld the decision of the Income Tax Appellate Tribunal, dismissing the revenue's appeal against the assessee. The Tribunal affirmed the CIT(A)'s ... Unsecured loan obtained from a trust - Addition u/s 68 r.w.s. 115BBE - HELD THAT:- Record shows that assessee had furnished details of payments made by lender trust (Dayal Trust) to the builder for the acquisition of the subject property- containing cheque numbers, dates, amounts of each installment of loan released, bank details, interest charged (rate and amount); along with confirmation from the lender trust, copy of Income Tax return, balance sheet and details of the taxable income of trust. Assessee had taken a loan from Dayal Trust for the acquisition of the subject property from Emaar MGF Land Ltd. Tribunal has adverted to the evidence placed on record which is the subject matter of the remand report of the AO. According to us, the addition made by the AO was not called for in the instant case. Assessee had been able to place the relevant material to back his explanation that the entry in its books of accounts was nothing but a loan extended by Dayal Trust. No substantial question of law. Issues:The appeal concerns Assessment Year (AY) 2016-17. The appellant/revenue seeks to challenge the order passed by the Income Tax Appellate Tribunal regarding additions made on account of an unsecured loan and interest paid by the respondent/assessee.Additions Made by Assessing Officer (AO):The AO made additions on account of an unsecured loan obtained by the respondent/assessee from Dayal Trust and interest paid to the trust. The total addition amounted to Rs. 3,26,72,155 under Section 68 read with Section 115BBE of the Income Tax Act, 1961.Appeal to Commissioner of Income Tax (Appeals) [CIT(A)]:The respondent/assessee appealed to the CIT(A) against the additions made by the AO. The CIT(A) deleted the additions after considering additional evidence provided by the respondent/assessee.Tribunal's Decision:The Tribunal dismissed the appeal by the appellant/revenue and upheld the CIT(A)'s order. It was noted that the interest paid by the respondent/assessee to Dayal Trust was bifurcated among the trust beneficiaries and taxed in their hands.Evidence Submitted by Respondent/Assessee:The respondent/assessee provided details of payments made to the builder for property acquisition, including cheque numbers, dates, amounts, bank details, and interest charged. The loan from Dayal Trust was specifically for acquiring the subject property.Judicial Finding:The Court found that the AO's addition was unwarranted as the respondent/assessee adequately substantiated that the entry in their books of accounts represented a genuine loan from Dayal Trust. No substantial question of law was identified, leading to the closure of the appeal.Conclusion:The appeal was closed, and parties were instructed to act based on the digitally signed copy of the order.