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of <h1>Tribunal Rules Renounced Loan Not Taxable as Income: Section 263 Order Cancelled</h1> <h3>APR Ltd. Versus Deputy Commissioner of Income-tax</h3> The Tribunal ruled in favor of the assessee, canceling the Commissioner's order under section 263 of the Act. The Tribunal held that the renounced loan ... - Issues Involved:1. Validity of the order u/s 263 of the Act.2. Applicability of the Supreme Court decision in T.V. Sundaram Iyengar & Sons Ltd. to the renunciation of a loan.3. Jurisdiction of the Commissioner to revise the assessment order.Summary:1. Validity of the order u/s 263 of the Act:The appeal was filed by the assessee against the order of the CIT, A.P.-I, Hyderabad, dated 25-3-1998, passed u/s 263 of the Act for the assessment year 1994-95. The CIT considered the assessment order erroneous and prejudicial to the interests of the Revenue due to non-inclusion of the renounced loan amount of Rs. 70,54,725 as income. The Tribunal noted that the loan was received as part of a rehabilitation package approved by BIFR and was not a trading receipt.2. Applicability of the Supreme Court decision in T.V. Sundaram Iyengar & Sons Ltd.:The CIT applied the Supreme Court decision in T.V. Sundaram Iyengar & Sons Ltd. to the renunciation of the loan, treating it as a trade surplus. The Tribunal disagreed, stating that the loan was not received in the course of a trading transaction but as a capital receipt. The Tribunal emphasized that the character of the loan did not change upon renunciation and remained a capital receipt, thus not taxable as income.3. Jurisdiction of the Commissioner to revise the assessment order:The Tribunal referenced the decisions in CIT v. Gabriel India Ltd. and Malabar Industrial Co. Ltd., asserting that the Commissioner cannot revise an assessment order merely due to a difference in opinion. The Tribunal held that the view taken by the Assessing Officer was a plausible one and thus, the revisionary powers u/s 263 were not justified.Conclusion:The Tribunal concluded that the order of the Commissioner u/s 263 was not sustainable and canceled the same, allowing the assessee's appeal.
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