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TMI Blog2018 (7) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... to various persons including the assessee. Commissioner of Income Tax (Appeals) is quite correct in holding that Revenue cannot take contradictory stands. In the case of the M/s. San Finance Corporation, it has held that the same is loan. When such a stand has been taken, the Revenue cannot take up a contrary stand and treat the same loan in the hands of the assessee as a gift or a sum received without consideration taxable under section 56(2)(vii)(a) of the Act. See THE COMMISSIONER OF INCOME TAX VERSUS MR. CHANDRAKANT H. SHAH [2010 (9) TMI 1221 - BOMBAY HIGH COURT - Decided in favour of assessee - ITA No. 215/Nag./2015 - - - Dated:- 2-7-2018 - SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER For The Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The said case was selected for scrutiny. During the course of scrutiny proceedings, the Assessing Officer called for various details. From the submissions made by the assessee as well as the statement recorded u/s 131 of the Act, the Assessing Officer came to the conclusion that for the purposes of raising the said loan of ₹ 70,57,180/-, the assessee had: i) Not entered into any written MOU with the lender M/s San Finance Corporation ii) Not furnished any guarantee for taking loan iii) Not mortgaged any property as security against the loan iv) No legal binding agreement was obtaining loan created for v) No legal binding agreement was created for repayment of loan vi) There was no written agreement for repayment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S during the year under consideration to the income of the assessee. 9. Against the above order, the assessee appealed before the ld. Commissioner of Income Tax (Appeals). 10. The ld. Commissioner of Income Tax (Appeals) noted that several evidences have been brought on record by the assessee to establish that the said amount received by the assessee from M/s. San Finance Corporation is in the nature of the loan. He observed that the same becomes evident from the fact that SFC has shown the said amount as loan in its books of account and in its balance sheet. That the assessee had also filed a confirmation before the Assessing Officer from the said SFC during the course of assessment proceedings. That the Assessing Officer has also ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court decision in the case of CIT vs. Chandrakant J. Shah in ITA No. 3154 of 2009 vide order dated 06.09.2010. 12. In these circumstances, by an elaborate order, the ld. Commissioner of Income Tax (Appeals) deleted the addition. The concluding portion of the order of the ld. Commissioner of Income Tax (Appeals) reads as under: 6.12 Considering the above cumulative factors, it is evident that the amounts which have been shown in the balance sheet as loan' and also confirmed by the lenders to be loan are not gift and cannot be brought to tax u/s 56 (2) (v) of the Act, even if the same remained unpaid. It is not a requirement of law or contract that the written agreement should be entered into while taking a loan'. Absen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,000/-. 17. Upon careful consideration, we note that in this case the assessee has claimed to have received a loan of ₹ 65,05,768/- from M/s. San Finance Corporation. The assessing officer was of the opinion that the agreement in this regard was not proper agreement. He noted that there was an absence of guarantee or mortgage. He held that the said interestfree receipt cannot be treated as loan. However, as noted by the ld. Commissioner of Income Tax (Appeals), the amount received from the M/s. San Finance Corporation by the assessee fully qualifies as loan. The M/s. San Finance Corporation has shown the same amount as loan in its balance sheet, the same has been duly accepted by the Revenue. As a matter of fact, in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax such transactions in this manner, then, the conduct of business would become impossible. It is also pertinent to mention here that '0'% interest loan or interest free loan have been institutionalized where the manufacturing companies or marketing companies compensate the financing companies who give money to the customers interest free to buy the products and these types of loan result into a vibrant economy benefiting all concerned and if the view taken by the Revenue Authorities is accepted then, all such transactions can be taxed as income u/s.56(2)(v) of the Act which cannot be the intention of the legislature, hence, in our view, the interpretation of Section 56(2) (v) made by the Revenue Authorities is not at all valid and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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