DCIT Vs Global Emerging Markets India Ltd. (ITAT Delhi)
Old Unsecured Loans Not Taxable u/s 28(iv) Without Waiver – ITAT Delhi Dismisses Revenue Appeal
The Delhi Bench of the ITAT dismissed the Revenue’s appeal for AY 2015, holding that long-outstanding unsecured loans cannot be taxed as income under section 28(iv) merely on the presumption that they have become time-barred or are no longer payable. The Tribunal noted that the assessee had raised the loans in earlier years, continued to reflect them as liabilities in its balance sheet, and had not written them off in its books.
The Assessing Officer invoked section 28(iv) on the assumption that since more than 12 years had elapsed, the loans stood waived. The ITAT rejected this approach, clarifying that the law of limitation bars the remedy, not the debt itself, and that a loan does not cease to exist without an express waiver or acknowledgment by the lender. The Tribunal further held that section 28(iv) applies to benefits or perquisites arising in kind, and not to monetary receipts such as loans; in any event, no “benefit” arose in the absence of waiver.
It was also noted that the department had accepted these loan balances in earlier assessments, and that prior additions under section 68 on similar loans had been deleted. Mere amalgamation of lending entities does not amount to waiver; the liability continues in favour of the amalgamated entity. Consequently, additions based on presumptions were held unsustainable and the Revenue’s appeal was dismissed.
FULL TEXT OF THE ORDER OF ITAT DELHI
