TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 582
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....nder section 148 of the Act on 16.03.2009 followed by notices under section 142(1) and 143(2) of the Act issued on 31.07.2009. 3. In the assessment order, the Assessing Officer has observed that the assessee has shown a loss after depreciation and tax at Rs..4,18,41,839/- on a total receipt of Rs..2,65,18,784/-. Against the above loss of Rs..4,18,41,839/-, the assessee has adjusted a sum of Rs..5,77,40,964/- which represents waiver of refinance loan of National Housing Bank, resulting in a profit of Rs..1,58,99,125/-. However, the amount of Rs..5,77,40,964/- representing waiver of refinance loan of National Housing Bank has not been considered both for normal computation and for the purpose of computation of book profit under section 115JB of the Act. Since the Assessing Officer was of the opinion that the benefit of waiver of loan/interest has arisen from the business, the same is taxable income, the assessee was asked to explain as to why the amount of Rs..5,77,50,964/- should not be treated as income of the assessee and subjected to tax. The assessee has filed detailed written submissions, wherein, it was stated as under: "We have entered into a one-time settlement of our ref....
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.... The assessee has further submitted before the ld. CIT(A) that the amount of loan received from National Housing Bank was never debited to P&L account, nor claimed as a deduction in any of the earlier years and hence, the provisions of section 41(1) have no application in its case. It was further submitted that what is required under section 28(iv) of the Act is benefit which is required to be valued and not a receipt or reduction in value in terms of money. This concept was recognized by various High Courts by considering the provisions of section 40C and 40A(5) for determination of perquisites in the hands of the directors and held that benefit normally should be in the nature of benefit provided and not in terms of monetary items. Therefore, it was submitted that what was received is reduction in value of loan and is not a benefit derived by the assessee and hence, the provisions of section 28(iv) is not applicable to the nature of transactions specified. After considering the submissions of the assessee and considering the facts of the case, the ld. CIT(A) has confirmed the order passed by the Assessing Officer. 7. Aggrieved, the assessee is in appeal before the Tribunal. The ....
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....uring the course of business and for the purposes of business of the assessee. Since the transaction of receiving re-finance loan from National Housing Bank was part of the business activities and during the course of business, any loss or gain from the said transactions, is directly assessable to tax under the head 'income from business'. Similarly, any waiver of the loan by the National Housing Bank will also be liable for tax under the head 'income from business'. 4.4. For example, if any housing loan advanced by the assessee to any customer becomes bad, the same can be claimed as bad debt, either ujs.36(1)(vii) or u/s.28 of the Act, as the said loans are during the course of ordinary business of the assessee. Similarly, any re-financing loans received by the assessee, as the' source for loans advanced by it, cease to exist by way of remission or waiver, etc., the same will become the income of the assessee u/s.28(iv) of the Act. Thus, the waiver of principal portion of the re-finance loan by the National Housing Bank is a value of benefit accrued to the assessee u/s.28(iv) of the Act. 4.5. As claimed by the assessee, cessation of liability may not be a....
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.... waived off part of their respective outstanding, comprising of principal and interest dues - Assessing Officer having invoked provisions of section 41(1), brought to tax amount of loan written off by banks and financial institutions - On second appeal, in respect of term loans, Tribunal concluded that these monies did not come in possession of assessee on account of any trading transaction; receipts were capital in nature, being loan payable over a period of time alongwith interest - Thus, waiver of said loans was not treated as income of assessee - However, waiver of loan taken in course of carrying on business was regarded as benefit in revenue field and, accordingly, addition made by Assessing Officer was confirmed - Assessee filed instant appeal challenging addition upheld by Tribunal - Whether following order passed by Court in case of Logitronics (P.) Ltd. v. CIT [2011] 197 Taxman 394 / 9 taxmann.com 302, it was to be held that impugned order of Tribunal did not require any interference - Held, yes [In favour of revenue] 4.7. In view of the above discussions and the judicial pronouncements, it is clear that if the loan is received during the regular course of business and....