The Income Tax Appellate Tribunal, Delhi Bench, dismissed the appeal filed by the Revenue and upheld the order of the Commissioner of Income Tax (Appeals) deleting the addition made under Section 28(iv) of the Income Tax Act in respect of unsecured loans outstanding in the books of the assessee. The Tribunal held that the Assessing Officer had proceeded on mere assumptions by treating the loans as time-barred and deemed to be waived, without any material to show that the liabilities had been written off in the books or that any benefit had accrued to the assessee. It was observed that the law of limitation only bars the remedy for recovery but does not extinguish the debt itself, and that long-standing outstanding loans cannot be presumed to have ceased merely due to the passage of time. The Tribunal further noted that the loans had been accepted by the Department in earlier assessment years, including scrutiny assessments, and that in respect of certain lenders which had undergone amalgamation, the liability continued to subsist in the hands of the amalgamated entity. The Tribunal categorically held that waiver or remission of a loan cannot be inferred in the absence of express confirmation from the lenders, and that Section 28(iv) cannot be invoked to tax cash receipts or notional benefits on presumptive grounds. Accordingly, the appeal of the Revenue was dismissed.

SOURCE LINK

https://itat.gov.in/public/files/upload/1767953694-ECBShn-1-TO.pdf                   

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