Section 68 loan proof and business income treatment sustain relief where banking evidence and lending activity are established.

Where an unsecured loan is supported by creditor confirmation, bank statements and related evidence showing receipt through banking channels, the identity, genuineness and creditworthiness requirements under section 68 are treated as discharged. Additional material examined by the appellate authority under section 250(4) was treated as permissible support rather than a fresh case, so the Rule 46A objection did not succeed. The text also states that interest from a systematic money-lending activity integrally connected with a business venture is assessable as business income, and the absence of a separate licence does not alter that character. On that basis, brought forward business losses may be set off against such income.

---

---

Issues: (i) Whether the deletion of the addition made under section 68 in respect of unsecured loan received through banking channel was justified, including the objection based on Rule 46A of the Income-tax Rules, 1962. (ii) Whether interest income from money-lending was assessable under the head "income from business and profession" with consequential set-off of brought forward business losses.

Issue (i): Whether the deletion of the addition made under section 68 in respect of unsecured loan received through banking channel was justified, including the objection based on Rule 46A of the Income-tax Rules, 1962.

Analysis: The assessee furnished confirmation from the creditor, bank statement and other supporting material to show that the loan was received through banking channels. The appellate authority also took further evidence and enquiry under section 250(4) and found that the identity, genuineness and creditworthiness of the creditor stood established. The objection under Rule 46A was rejected because the later material was treated as additional support for a claim already raised before the Assessing Officer, not as a wholly new case.

Conclusion: The deletion of the addition under section 68 was upheld and the issue was decided in favour of the assessee.

Issue (ii): Whether interest income from money-lending was assessable under the head "income from business and profession" with consequential set-off of brought forward business losses.

Analysis: The assessee's lending activity was found to be systematic and inter-linked with the business of production of motion pictures under the same management. The Tribunal accepted that the interest arose from a business activity and not merely from passive investment income, and held that the absence of a separate licence did not alter the character of the activity for income-tax purposes. Once treated as business income, the consequential set-off of brought forward business losses followed.

Conclusion: Interest income was held to be assessable under the head "income from business and profession", and the related set-off was sustained in favour of the assessee.

Final Conclusion: The Revenue's challenge failed on both the unsecured-loan addition and the head-of-income dispute, and the assessment relief granted by the appellate authority was sustained.

Ratio Decidendi: Where a loan transaction is supported by confirmation and banking evidence and the appellate authority makes permissible enquiry under section 250(4), the onus under section 68 stands discharged; further, income arising from a systematic lending activity integrally connected with a business venture is assessable as business income, enabling consequential loss set-off.

---