TaxTMI 
TaxTMI 
2014 (12) TMI 969
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....(A) has erred in law and on facts in deleting the addition of Rs. 6,74,54,77,332/- made u/s 28(iv) r.w.s. 41 r.w. explanation 2(iv) of the Income-tax Act, 1961. 3. The brief facts of the case are that the Assessing Officer observed that during the year under consideration, Sachna Unit of the assessee-company got demerged with Nirma Limited. Consequent on compromise, re-construction and demerger, the total amount of secured and unsecured loans and liabilities had gone down from Rs. 16,82,94,84,000/- to Rs. 138 crores. As a result of settlement with the financial institutions etc., the liabilities of the assessee-company wend down by Rs. 15,44,94,84,000/-. Out of this reduction, Rs. 8,70,40,06,668/- pertained to the interest payable on the....
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....The Assessing Officer noted that the assessee has claimed an amount of Rs. 24,10,42,443/- as amount of loan waiver as per Note No.21 as under:- "The assessee has claimed an amount of Rs. 24,10,42,443/- as amount of loan waived. As per Note 21, the assessee asunder: 'In accordance with deed of compromise executed by the company with two banks, the banks have waived Rs. 24,10,42,443/- as per following particulars (a) Principal amount of loan Rs. 14,12,15,000 (b) Unpaid interest Rs. 9,98,27,443 Unpaid interest, which was debited to P&L account in earlier years but not paid was disallowed u/s.43B. Therefore, the amount waived by banks in respect of interest is not chargeable to tax. It is submitted that the principal amount of....
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....f principal as well as unpaid interest was waived. It is stated that unpaid interest was disallowed u/s.43B and hence the balance amount of principal should have been allowed as it was never claimed as deduction by the assessee. In this connection, it is noticed that these loans were taken much earlier and apart from the unpaid interest for several years, interest was charged and allowed a/so in assessment. Thus simply for the reason that by way of compromise principal amount of loan was waived, it does not automatically mean that these alleged amounts stated to be as principal amount is only a principal. In fact the assessee has already been allowed much more' amount as interest payment. In this regard, only the amount pending at a par....
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....Act. Section 41(1) as was applicable for the assessment year under consideration reads as under:- "(1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee, and subsequently during any previous year the assessee has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by him or the value of benefit accruing to him, shall be deemed to be profits and gains of business or profession and accordingly chargeable to incometax as the income of that previous year, whether t....
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....der the head "Profits and gains of business or profession". In the facts of the present case, it cannot be said that the assessee-company was carrying on business of obtaining loans and that the remission of such loans by the creditors of the company was a benefit arising from such business." In view of the above principle laid down by the Hon'ble jurisdictional High that the amount waived by the lender bank is not an income u/s.2(24) of the Act and further Section 28 also does not include amount of loan waive by the lender u/s 41 of the Act cannot apply to this receipt in respect of this amount. Respectfully, following the Hon'ble jurisdictional High Court on this issue, we decide this issue in favour of the assessee and against the....