TMI Blog2012 (11) TMI 1102X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee is a limited company deriving income from manufacture and sale of papers. Return declaring Nil income was e-filed on 11-09-2008. During the course of assessment proceedings it was gathered by the A.O. that the assessee had shown unsecured loans amounting to ₹ 28,00,000/- from the following concerns :- (i) Aeron Sales (P Ltd. ₹ 15,00,000/- on 13-05-2005 (ii) Humera Engineering (P). Ltd.Rs. 5,00,000/- before 01-04-2005 (iii) Jagdarnba Cement Co.(P). Ltd.Rs. 4,00,000/- before 01-04-2005 (iv) Nikhar Agro Farm (P) Ltd. ₹ 2,00,000/- before 01-04-2005 (v) Shikhar Capital Service (P) Ltd.Rs.2,00,000/-before 01-04-2005 The A.O. required the assessee to explain the aforesaid loans and to show cause as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continue such loans in view of turnover at ₹ 40,31,71,044/-. (v) The assessee could have paid these loans any time hence continuance of these loans created suspicion. (vi) The creditor had not lodged any legal recovery case against the assessee for outstanding loans. Hence it was established that these loans were completely under the control of the assessee. Thus it was inferred by the A.O. that the aforesaid loans were income of the assessee and profit chargeable to tax as defined u/s 41 (1) of the Act. The A.O. placed reliance on the decision of the Hon'ble ITAT, Delhi in the case of Distinctive Properties Leasing Ltd. vs. ITO 1 SOT 460, wherein it held that where liability was barred by limitation and there was no po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e involved in this appeal has been considered by the CIT(A), who concluded to delete the impugned addition as made by passing an elaborate order as per last para. from pages5-6 as under: The facts of the case as well as submissions made by the appellant have been carefully considered. It is observed that the A.O. had disallowed unsecured loans to the extent of ₹ 28,00,000/- on the ground that these loans were outstanding for more than three years therefore exceeded time limit available in Schedule 19 21 of Laws Limitation Act. Further the loans were raised by the appellant without any financial need and the depositors had not filed legal suit against the appellant for recovery of the aforesaid loans. The A.O. on such basis held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way to pay the same under the substantive law. Further indebtedness of the debtor continues even after the expiry of the period of limitation which only deprives the creditor of his liability to institute a suit in Court of Law to recover the debt. Thus, it cannot be presumed that the creditor has remitted the debt when remedy to sue is barred by limitation period or that liability of the debtor has finally ceased because of the same. It would be a different situation if the creditor abandons his right to recover the debt or the creditor intends not to honour the liability even when demanded. In the case under consideration, the appellant has furnished confirmations of loans given and confirmation of the. amount outstanding as on 31-03-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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