AKS Homes & Infrastructure Pvt. Ltd., faced with challenges regarding unsecured loans and interest disallowances, pursued legal resolution by contesting the assessments made for the fiscal year 2013-14. This legal examination unfolds within the context of ITA No. 4893/DEL/2019 as the company seeks relief from certain financial obligations imposed by tax authorities.
The dispute originated from the order passed by the Commissioner of Income Tax (Appeals)-32, New Delhi on March 29, 2019. The key issues at stake included the addition of Rs. 4,90,000 attributed to unsecured loans and a disallowance of Rs. 2,50,000 related to interest on these loans under section 36(1)(iii) of the Income Tax Act, 1961.
During the proceedings, AKS Homes & Infrastructure Pvt. Ltd. presented various documents to support its claims, including confirmation from the lender Ms. Asha Rani, who, according to the company, had provided the loan from her savings over many years and was not required to file tax returns due to her income being below the taxable threshold. However, both the Assessing Officer and the CIT(A) found issues with the creditworthiness of the lender and the veracity of the funds used for the loan.
The tribunal, led by Judicial Member H.S. Sidhu, examined the submissions and upheld the addition of Rs. 4,90,000 on grounds of insufficient evidence regarding the lender’s financial status. Additionally, the tribunal sustained the disallowance of Rs. 2,50,000 for interest on the unsecured loan, aligning with the reasoning that the company did not convincingly demonstrate the use of interest-free or own funds for the financial transactions in question.
The tribunal’s decision underscores the critical importance of maintaining robust and transparent financial records, especially when dealing with unsecured loans and interest claims. For AKS Homes & Infrastructure Pvt. Ltd., the case concluded with the upholding of the contested additions, emphasizing the necessity for clear and credible evidence in financial dealings.
AKS Homes & Infrastructure Challenges Unsecured Loan Additions in ITA 4893/DEL/2019
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