The Tax Publishers2021 TaxPub(DT) 0477 (Del-Trib)

INCOME TAX ACT, 1961

Section 56

Where AO made addition in respect of unsecured loan as a gift purely on the basis of surmises and presumption, because her husband had also given unsecured loan which was subsequently treated as gift by assessee and simply because husband had treated his loan as a gift to his wife, cannot be the reason for drawing a similar conclusion for unrelated parties that the other persons will also convert their loan to gift, therefore, amount which was treated as loan in the books of account and has also been repaid back as a loan, same cannot be treated as a gift.

Income from other sources - Addition of unsecured loan as a gift - Gift from unrelated persons treated as assessee's income under section 56(vi) -

During the course of search certain material was found and seized which related to the assessee and AO on perusal of the documents noted that assessee had taken unsecured loans from the certain persons which were outstanding. He observed that during the previous assessment proceedings, these parties have been shown as sundry creditors and not as unsecured lenders. Assessee had taken money from her husband in financial year 2007-08 and was also shown as a sundry creditor in her books of account and this amount later on has been squared up by treating it as a gift given by her husband. Thus, he presumed that this was some kind of modus operandi carried out by assessee for treating loans as gift in her books and accordingly, he treated the sums received as gift from unrelated persons and treated as assessee's income under section 56(vi). Held: AO made addition in respect of unsecured loan as a gift purely on basis of surmises and presumption, because her husband had also given unsecured loan which was subsequently treated as gift by assessee. AO treated loan taken from unrelated person as gift and had taxed under section 56(vi). Simply because husband had treated his loan as a gift to his wife, cannot be the reason for drawing a similar conclusion for unrelated parties that the other persons will also convert their loan to gift, especially when in the books of account amount has been reflected as loan. Therefore, amount which was treated as loan in books of account and was also repaid back as a loan, same cannot be treated as a gift.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2008-09



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