2012 (11) TMI 1102 - AT - Income Tax

Summary

Issues involved: Appeal against deletion of addition of unsecured loans u/s 41(1) of the I.T. Act, 1961 for assessment years 2008-09.

Summary:
1. The Assessing Officer disallowed unsecured loans totaling to Rs. 28,00,000/- as they were outstanding for more than three years and exceeded the time limit under the Law of Limitation Act. The loans were interest-free, raised without financial need, and from related parties. The AO considered them as income u/s 41(1) of the Act.
2. The CIT(A) deleted the addition after considering the appellant's submissions, confirming that the loans were duly recorded and raised for obtaining credit limits from banks. The AO's interpretation of the Law of Limitation Act was deemed incorrect as it did not constitute cessation of liability.
3. The ITAT concurred with the CIT(A)'s decision, noting the absence of contrary material or higher court decisions presented by the Revenue. The appeal was dismissed for lacking merit.

This judgment highlights the importance of properly documenting and justifying financial transactions to avoid adverse tax implications under relevant legal provisions.