Loans for Capital Use, Payments via Bank — ITAT Upholds Full Relief on All Additions

ITO Vs Govindam Agro Foods Private Limited (ITAT Ahmedabad) Revenue challenged four deletions made by CIT(A). ITAT upheld all four, dismissing the appeal in full. Sec 41(1) – Alleged cessation of liability (₹1.06 crore): AO invoked Section 41(1) claiming old unsecured loans had ceased. CIT(A) found, based on audited evidence, that the loans were taken before commercial operations began & were used for capital expenditure, not working capital. Hence Section 41(1) did not apply, & ITAT confirmed this finding. Sec 37(1) – Disallowance of expenses (₹7.66 lakh): AO made an ad hoc 30...