ACIT (OSD) Vs Generica India Ltd. (ITAT Delhi)
Corporate Loan Cannot Be Taxed Under Section 56(2)(x) Without Proof of Non-Repayment; Section 56(2)(x) Addition Deletion Upheld as AO Failed to Establish Impossibility of Loan Repayment: ITAT Delhi.
The Revenue appealed against the order of the CIT(A)/NFAC dated 01.10.2025 for Assessment Year 2022-23, which had deleted an addition of Rs.10.51 crore made by the Assessing Officer under Section 56(2)(x) of the Income-tax Act, 1961. The assessee had filed its return of income on 28.09.2022 declaring total income of Rs.6,96,03,120. The case was selected for scrutiny under CASS on the issue of a large increase in unsecured loans. During assessment under Sections 143(3) read with 144B, the Assessing Officer treated an unsecured corporate loan of Rs.10.51 crore received from an associated company as money received without consideration and added the amount under Section 56(2)(x).
The Revenue challenged the deletion of the addition, contending that the assessee had failed to establish the genuineness and legal validity of the unsecured loan, had not produced a valid contemporaneous Board Resolution, had delayed filing Form MGT-14, and had violated provisions of the Companies Act. It also contended that the loan was without consideration and that the CIT(A) had failed to consider judicial precedents and the applicability of Section 68.
