Genuine unsecured loan not taxable under section 56(2)(x) merely because of alleged company law non-compliance.

A bona fide unsecured corporate loan received from a group concern was held not taxable under section 56(2)(x) merely because of alleged Companies Act non-compliance, including delayed filing of forms and absence of a contemporaneous board resolution. The lender's identity, creditworthiness and the genuineness of the transaction were not disputed, and the funds were received through banking channels and recorded in the books. The Tribunal held that a genuine loan carrying an obligation to repay does not become income under section 56(2)(x) simply due to alleged corporate law irregularities. The addition was therefore unsustainable and the deletion was upheld.

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Issues: Whether a bona fide unsecured corporate loan received from a group concern could be brought to tax under section 56(2)(x) of the Income-tax Act, 1961 merely because of alleged non-compliance with company law formalities, including delayed filing of corporate forms and absence of a contemporaneous board resolution.

Analysis: The addition was made only on the footing that the loan transaction was not genuine and was without consideration because the assessee had not complied with certain provisions of the Companies Act, 2013. The material on record showed that the lender's identity, the genuineness of the transaction, and the lender's creditworthiness were not disputed. The loan was advanced through banking channels and was reflected in the books of account. The governing question was whether section 56(2)(x) could be invoked merely because of alleged corporate law violations, when the transaction was otherwise a loan carrying an obligation of repayment. The Tribunal held that section 56(2)(x) does not apply to a genuine loan received with an obligation to repay, and that alleged violations of company law by themselves do not convert such a loan into taxable income under that provision.

Conclusion: The addition under section 56(2)(x) was not sustainable, and the Revenue's challenge to the deletion failed.

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