Interest free loan from NRI - regarding

Tax queries 2593 views 2 replies

Dear Sir,

 

One of my client has taken a unsecured loan from NRI (who does not hve any income in india) for 50 lakhs and my client has repaid as per the mutual understanding agreement. All this transactions are through Bank. Now ITO in scrutiney, making an order by adding this unsecured loan as income and making the order. I have produced him the loan confirmation letter from the NRI and the bank statements of the both the parties which is matching ransactions with cheque nos.  Kindly suggest any case law or how defend if I go for appeal? Pls. advice

Replies (2)

For loan transactions the following are necessary

1.identity of loan creditor

2.mode of receipt

3.Source from which the amount was given

Avlinte, the issue is that ur client have taken an interest free loan. Which mean that the genuiness of the transaction is doubted from the outset.

Secondly, as the loan provider is not a resident of India, its hard for the ITO to trace his source of income.

So first you have to provide the ITO that why the loan was given without interest and then accordingly proceed further.

Piyush

 


CCI Pro

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