TaxTMI 
TaxTMI 
2013 (10) TMI 762
X X X X Extracts X X X X
X X X X Extracts X X X X
....n, the CIT observed that the assessee had entered into 'One Time Settlement' (OTS) with its bankers, M/s State Bank of India and M/s Industrial Development Bank of India, as a result of which, it got waiver of loan amount of Rs. 3,83,98,703/- and the CIT was of the opinion that the said waiver represented benefit to the assessee and became income of the assessee during the year under consideration. Therefore, the CIT issued a show cause notice u/s 263 dated 15/02/2010 calling upon the assessee to show cause as to why the said waiver amount not considered as income by the AO in the assessment order passed u/s 143(3) dated 31/12/2008 be not treated as assessee's income. 3. During the course of hearing, the AR was requested to furnish the documentary evidence in support of waivers granted by SBI and IDBI. In reply, the learned AR submitted that as per the notes to the accounts for the year 2005-06 at S.No. 9 vide page-6, the details of the waiver from IDBI and SBI towards OTS are mentioned as under: Name of the Bank Total Due OTS Waiver (Rs.) SBI 3882.60 1396.00 24,86,60,569 IDBI 6885.05 5122.00 17,63,05,000 42,49....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, the learned counsel for the assessee filed precise grounds of appeal including additional grounds of appeal, which are as follows: "1. The CIT-III has erred on the amount waived by IDBI & SBI by considering the principal portion of amount Rs. 383.98 lakhs business income of the assessee u/s 41(1)/28(iv). The waiver approved by the Financial Institutions is not the business object of the assessee. 2. Mere change of opinion cannot be basis for issuing order u/s 263 by considering another view as per the case law Malabar Industrial Co. Ltd. Vs. CIT, [2000] 243 ITR 83 (SC). 3. The assessee has placed reliance on the following case laws: 1. Chetan Chemicals Vs. CIT (Guj. HC) 2. Jehangir Gullabbhai Vs. Jt. CIT [2008] 21 SOT 603 (Mum.) 3. Helios Food Improvers (P) Ltd. Vs. DCIT, [2007] 14 SOT 546 (Mum.) 4. D.S. Narayana & Co. Vs. ITO [1987] 27 TTJ (Hyd) 179 5. IFB Securities Ltd. Vs. ITO [2006] 101 TTJ (Kol) 829 6. Mindteck (India) Ltd. Vs. ITO [2009] 124 TTJ (Mumbai) 830. 9. The additional grounds filed by the assessee are as follows: "7. The CIT-III, Hyderabad erred by passing the order u/s 263 on 30/03/201 by considering another view for the facts/in....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... v) Rolling Division September Installment not paid in time as per Annexure-III to 3CD report. Why the same should not be added to the total income. vi) Interest on IREDA term loan at Rs. 67,63,200/- why the same should not be added in the absence of details of payments. vii) Interest accrued and due on term loans as per Schedule III of Balance Sheet at Rs. 11,91,59,076/-. Why the same should not be added to the income." 12. The learned counsel for the assessee submitted that the assessee company has been engaged in the business of manufacturing of Iron and Steels and wind power generation and manufacture of Ferro Chrome business for the above assessment years and the one time settlement has been made for the payments of liability of the outstanding with the Financial Institutions like IDBI and SBI and the benefit or waiver has been given for the payment to be made to the liability of the Institution. He pointed out that the assessee has got the waiver not from the business done of the assessee during the course of business and the waiver obtaining/applying is not the business of the assessee by any stretch of imagination be said to be a benefit of the assessee which a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r benefit is obtained in a subsequent year. 18. Further, the learned counsel submitted that the amount of loan received has no connection to any such allowance or deduction referred to above as it is a mere loan unconnected to any allowance or deduction made in the assessee's assessment. Although it is an undisputed facts that the assessee received benefit by way of remission or cessation of liability, the same is certainly not in respect of any trading liability as the assessee did not receive the said amount in respect of any sales or purchases or other related direct or indirect expenses to qualify for trading activity. It is submitted that section 41(1) deals with the amounts or benefits received and not the ones input. Further, the provisions of s. 28(iv) do not come to the rescue of the revenue. For this proposition, he relied on the decision in the case of Jehangir Gullabhai Vs. Jt. CIT [2008 21 SOT 603 (Mum) and Helios Food Improvers (P) Ltd. Vs. DCIT [2007] 14 SOT 546 (Mum). The learned counsel also relied upon the following case laws:- 1. D.S. Narayana & Co. Vs. ITO [1987] 27 TTJ (Hyd) 179 2. IFB Securities Ltd. Vs. ITO [2006] 101 TTJ (Kol) 829 3. Mindteck (In....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue - Rampyari Devi Saraogiv. CIT[1968] 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwalv. CIT[1973] 88 ITR 323 (SC)." 20. The learned counsel submitted that the waiver of loan by creditor not being in respect of trading liability, section 41(1) does not apply. 21. We find that the Hon'ble ITAT, Hyderabad Bench in the case of Sun Minerals Vs. Addl. CIT, [2013] 55 SOT 54 has held that an order passed by the Assessing Officer becomes erroneous and prejudicial to the interests of the revenue u/s 263 in the following cases: i)....... ii)... iii) The order passed by the Assessing Officer is a stereotype order which simply accepts what the assessee has stated in his return ....