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The assessee received an unsecured loan of Rs. 1 crore from M/s...

Tax Authorities Uphold Assessee's Loan Source, Stock Valuation Method, and Interest Disallowance; Reject Cessation of Liability Claim.

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Income Tax September 28, 2024 Case Laws AT
The assessee received an unsecured loan of Rs. 1 crore from M/s Betala Investment Finance Ltd., which was later transferred to Lahoti Holding Ltd. due to a name change. The authorities accepted the explanation regarding the source of the loan. Regarding stock valuation, the assessee followed a consistent method, and the authorities upheld the assessee's valuation. The authorities also accepted the assessee's explanation for the difference in raw material consumption, considering it a clerical mistake. The addition u/s 41(1) for cessation of liability was deleted as the revenue could not establish remission of income. The disallowance of interest paid above 12% on unsecured loans was rejected, following the principle of consistency as the same rates were allowed in earlier years. The addition based on the stock statement submitted to the bank for obtaining credit limits was deleted, relying on judicial precedents that such statements cannot be the basis for additions u/s 69B.

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Acts Income Tax