2015 (2) TMI 1102

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....items and general commission agent. Assessee filed its return of income for A.Y. 06-07 on 30.12.2006 declaring total income of Rs. 6,42,718/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 22.12.2008 and the total income was determined at Rs. 41,54,983/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 30.03.2010 granted substantial relief to the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Revenue is now in appeal before us and has raised the following grounds;- 1. The Ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 35,08,765/- made on account of credit in partners capital account....

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....rried the matter before ld. CIT(A) who decided the issue in favour of the Assessee by holding as under:- 5.1 I have considered the submissions made by the appellant and the evidence produced by him. I have also gone through the assessment order. It is noticed that AO has treated the aforesaid amount of Rs. 35,08,765/- as income simply on the ground that the interest expenditure has been added in cessation of this liability was of the firm and it cannot be shifted to the partners,. The AO has also observed that any gains and benefits arising from the business was taxable income in view of Section 28(iv) r.w.s. 2(24)(vd) of the Act. The amount which was not payable to the depositor and credited to the partners capital account was as ....

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.... company had obtained unsecured loans from various creditors and in the light of the financial difficulties faced by the company, a compromise was reached wherein certain creditors remitted unsecured loan which the AO treated as a benefit accruing to the company in the course of its business activity and brought to tax u/s.28(iv) of the Act. Thus, the facts of the appellant are identical to the facts in the case relied upon by the appellant. Therefore, respectfully following the binding decision of the jurisdictional High Court of Gujarat, it is held that the remission of unsecured loan could not be subjected to tax by invoking section 28(iv) of the Act. 5.3 In the facts of the present case, it could not be said that the appellant ....

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....) Ltd (130 ITR 168) (Guj.) In view of the aforesaid facts of the case and position in law, the addition of Rs. 35,08,765/- made u/s. 28(iv) r.w.s. 2(24) is deleted. Appeal is allowed 5. Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us. 6. Before us, ld. D.R. supported the order of A.O. On the other hand ld. A.R. reiterated the submissions made before A.O and ld. CIT(A) and supported the order of ld. CIT(A). 7. We have heard the rival submissions and perused the material on record. The issue in the present case is about the taxability of written back amount of loan. Ld. CIT(A) while granting relief to the Assessee has given a finding that the Assessee was not carrying on the business of obtaining loa....