Section 68 addition on unsecured loans fails where the same receipts are later forfeited and taxed again.

Addition under section 68 for unsecured loans is discussed as unsustainable where the same amounts were later forfeited and offered to tax in a subsequent assessment year. The assessee's later year profit and loss account and computation showed that the receipts had already been included as other income, so taxing them again in the year of borrowing would create double taxation. On those facts, the earlier year addition was deleted because the revenue was not deprived of tax and the same sum could not be brought to tax twice.

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Issues: Whether the addition made under section 68 in respect of unsecured loans was liable to be deleted on the ground that the same amounts were subsequently forfeited and offered to tax in a later assessment year, making the earlier year's addition result in double taxation.

Analysis: The assessee demonstrated from its later year profit and loss account and computation that the loan amounts had been forfeited and included in other income in the subsequent assessment year. On that basis, taxing the same receipts in the year of borrowing would lead to taxation of the same amount twice. The later offer to tax showed that the revenue was not deprived of tax, and the addition for the earlier year became unsustainable on the facts presented.

Conclusion: The addition under section 68 was deleted and the assessee succeeded on the merits of the addition.

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