Proof that Entry in Books of Accounts was Loan extended by Dayal Trust: Delhi HC dismisses Income Tax Appeal [Read Order]

The Delhi High Court dismissed an income tax appeal on proof that the entry in books of accounts was loan extended by Dayal Trust.

By the instant appeal, the appellant/revenue sought to assail the order passed by the Income Tax Appellate Tribunal. The record showed that the Assessing Officer (AO), via the assessment order, had made additions on account of an unsecured loan obtained by the respondent/assessee from a trust going by the name Dayal Trust. The addition on account of the unsecured loan made was to the extent of Rs.2,91,00,849/-.

Besides this, an addition was also made for the interest paid by the respondent/assessee, Avdesh Mishra, to Dayal Trust. The amount added on this score was Rs.35,71,306/-. Therefore, the total addition made by the AO was Rs.3,26,72,155/-. This addition was made under Section 68 read with Section 115BBE of the Income Tax Act, 1961.

Furthermore, the record showed that the respondent/assessee had furnished details of payments made by lender trust (Dayal Trust) to the builder, Emaar MGF Land Ltd., for the acquisition of the subject property containing cheque numbers, dates, amounts of each instalment of loan released, bank details, interest charged (rate and amount); along with confirmation from the lender trust, copy of Income Tax return, balance sheet and details of the taxable income of trust.

A Division Bench of Justices Rajiv Shakdher and Girish Kathpalia observed that “To be noted, the respondent/assessee had taken a loan from Dayal Trust for the acquisition of the subject property from Emaar MGF Land Ltd. According to us, the addition made by the AO was not called for in the instant case. The respondent/assessee had been able to place the relevant material to back his explanation that the entry in its books of accounts was nothing but a loan extended by Dayal Trust.”

“Thus, for the foregoing reasons, we are of the view that no substantial question of law arises for our consideration. The appeal is, accordingly, closed” the Court concluded.

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