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Facts
The assessee appealed against the CIT(A)'s order confirming the disallowance of unsecured loans. The assessee took a loan of Rs. 7 lakhs from M.A. Financial Service Pvt Ltd. and repaid Rs. 2 lakhs during the assessment year, with the balance of Rs. 5 lakhs repaid in the succeeding year. Similarly, a loan of Rs. 9.50 lakhs was taken from FideliteCommosales Pvt Ltd., Rs. 50,000/- was repaid during the year, and the remaining Rs. 9,00,000/- was repaid in the succeeding year.
Held
The Tribunal noted that the loans were taken and repaid during the assessment year or the immediately succeeding assessment year. The ledger accounts clearly showed the repayment of these loans, which was not disputed by the Revenue. Therefore, there was no basis for retaining the addition.
Key Issues
Whether the disallowance of unsecured loans, which were subsequently repaid, is justified.
Sections Cited
Section 68 of the Income Tax Act, 1961 (implied, as it pertains to unexplained cash credits/loans)
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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
O R D E R Per Bench
This is an appeal filed by the assessee against the order of the ld CIT(A) This is an appeal filed by the assessee against the order of the ld CIT(A) This is an appeal filed by the assessee against the order of the ld CIT(A)- dated in Appeal No. dated in Appeal No. for the assessment year. for the assessment year.
Shri Khubchand T Pandya, ld SR Shri Khubchand T Pandya, ld SR DR appeared for the revenue and Shri DR appeared for the revenue and Shri DeveshPoddar,ld AR appeared for the assessee. ld AR appeared for the assessee.
P a g e 1 | 5
It was submitted by ld AR that the only issue in assessee’s appeal was against the action of the ld CIT(A) in confirming the disallowance made by the AO in respect of unsecured loan taken from M.A. Financial Service Pvt Ltd., and M/s. FideliteCommosales Pvt Ltd.,. It was the submission that during the impugned assessment year, the assessee had taken loan of Rs.7 lakhs from M.A. Financial Service Pvt Ltd., and repaid Rs.2 lakhs during the relevant assessment year and the balance was only Rs.5 lakhs. It was the submission that the balance of Rs.5 lakhs was also repaid during the immediately succeeding assessment year being A.Y. 2018-19. Ld AR placed before us the ledger copy of the said unsecured creditor as follows:
Similarly, in respect of FideliteCommosales Pvt Ltd., the assessee had taken loan during the impugned assessment year to an extent of Rs.9,50,000/- and repaid Rs.50,000/- during the assessment year itself and the balance
P a g e 2 | 5 Rs.9,00,000/- was also repaid during the immediately succeeding assessment year. The ledger account of FideliteCommosales Pvt Ltd., was shown as follows:
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P a g e 3 | 5
It was the submission that as the loans have been taken and repaid during the immediately succeeding assessment year, the addition made by the AO and confirmed by ld CIT(A) be deleted.
In reply, ld Sr DR vehemently supported the orders of the AO and ld CIT(A).
We have considered the rival submissions. A perusal of the facts in the present case clearly shows that the assessee has also repaid the loans during the immediately succeeding assessment year. As the loans had already been squared up, there is no basis in retaining the addition. The ledger accounts of both the unsecured creditors clearly show the repayment and the repayment has not been disputed by the Revenue. This being so, the addition made in respect of the unsecured loans taken from both the parties i.e.M.A. Financial Service Pvt Ltd., and M/s. FideliteCommosales Pvt Ltd. Stands deleted.
In the result, appeal of the assessee stands allowed.