The Commissioner Of Income Tax-I, Chandigarh v. Saranapal Singh, Huf

of 2010 *** IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH Income-tax Appeal No.294 of 2010 Date of decision: 6.10.2010 The Commissioner of Income Tax-I, Chandigarh ...Appellant Versus Saranapal Singh, HUF ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Ms. Urvashi Dhugga, Advocate for the appellant. Mr. Ravi Shanker, Advocate for the respondent.**** ADARSH KUMAR GOEL, J (Oral). 1.This appeal has been preferred under Section 260A ofIncome Tax Act, 1961 (hereinafter referred to as 'the Act”) proposingfollowing substantial question of law arising out of order dated9.9.2009 of the Income Tax Appellate Tribunal, Chandigarh Bench'B', Chandigarh (hereinafter referred to as “the Tribunal”) passed inITA No.892/Chandi/2009 in respect of assessment year 2006-07:- “Whether, on the facts and in the circumstances of thecase, the Hon'ble ITAT has erred in affirming the order ofthe CIT (A) Chandigarh in view of the decision of Hon'bleITAT, Mumbai Bench in the case of Chander Kant H.Shah, 19 DTR 241 (Mum) by holding that the intention ofSection 56(2) (v)is to tax cases of bogus gifts-whereasactually no word like gift has been used in the said section of the Income Tax Act, to suggest that theseprovisions pertain to gifts only?” 2.The Assessing Officer made addition to the returnedincome on account of amount received as loan which was treated tobe receipt within the meaning of Section 56(2)(v) of the Act. Onappeal, the CIT(A) set aside such addition which was upheld by theTribunal. The Tribunal observed in para 9 as under:- “Apart from the aforesaid, in so far as the present case isconcerned, there is no dispute regarding the nature andsource of the impugned unsecured loans. The nature ofthe amounts having been received as unsecured loansand the sources thereof, is not in doubt. The assesseehad also explained that such unsecured loans have beenrepaid within a short period and the purpose of raising theloans was also explained before the Assessing Officer.The Assessing Officer has not doubted any of theaforesaid features of the transaction but has merelyobserved that since the unsecured loans were raised freeof interest, it constituted receipt of money 'withoutconsideration' and therefore he proceeded to invokeSection 56(2)(v) of the Act. In our considered opinion, thefactum of the assesee being liable to repay the impugnedunsecured loans, imbibes the same with characteristics ofa liability. Merely because the amount of loan has beenraised without involving payment of interest, cannot be *** seen to have vested the impugned amount withcharacteristics of an income, within the meaning ofSection 56(2)(v) of the Act. The existence of theexpression “without consideration” in Section 56(2)(v)cannot distract from the fact that in the impugned case,the sum of money received in question carried a liability ofits repayment and the same was not received by theassessee with an absolute unfettered right of possession.Therefore, in the totality of circumstances of the prsentcase, we find no justification to uphold the stand of theAssessing Officer and the CIT (Appeals) was justified indeleting the impugned addition. Accordingly, theconclusion of the CIT (Appeals) is affirmed.” 3.We have heard learned counsel for the parties. 4.Learned counsel for the appellant submits that scope ofSection 56(2)(v) is very wide which included any amount received bythe assessee unless the same was covered by the proviso. 5.We are unable to accept the submission. 3.We have heard learned counsel for the parties. 4.Learned counsel for the appellant submits that scope ofSection 56(2)(v) is very wide which included any amount received bythe assessee unless the same was covered by the proviso. 5.We are unable to accept the submission. 6.The amount contemplated under Section 56(2(v) of theAct cannot include loan which is shown to have been repaid. In thefacts and circumstances of the present case, a concurrent finding offact has been recorded that the amount received was a short termloan which was duly repaid. The said amount cannot be treated asincome of the assessee under Section 56(2)(v) of the Act. Thus, nosubstantial question of law arises. of 2010 *** 7.The appeal is consequently dismissed. (Adarsh Kumar Goel) Judge October 06,2010Pka (Ajay Kumar Mittal) Judge