TaxTMI 
TaxTMI 
2016 (10) TMI 530
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....aiver cannot be termed as revenue receipt, without appreciating that in the course of assessment proceedings assessee failed to furnish any evidence to show that the loan was acquired for the purpose of acquiring/investment in capital assets. Therefore the benefit of remission of loan amounts to benefits as construed u/s. 28(iv) and is liable to be taxed as held in the case of Solid Container Ltd. Vs. DCIT (308 ITR 417)." Assessee's C.O.No.155/Mum/2013 "1. The learned Commissioner of Income Tax (Appeals) ought to have directed for deletion of disallowance made of interest of Rs. 14,65,654/- incurred during the year." 2. At first, we take up the Revenue's Appeal in ITA No.4466/Mum/2012. The brief facts in the case are that the Assessee Company engaged in the business of investment in shares, bonds and debentures filed its return of income for assessment year 2008-09 on 30-09-2008 declaring total income at Rs. 3,77,24,331/-. The return was selected for scrutiny and the AO after issuing statutory notices and receiving replies passed the assessment order u/s 143 (3) of the Act on 06-10-2010 assessing the total income of the assessee at Rs. 12,33,24,300/- after disallowing Rs. 8....
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....ver of the principal amount and hence the A.O. was of the view that as a result of such benefit arisen to the appellant company, the same will be taxable in the hands of the appellant as revenue receipt u/s 41(1) r. w. s. 28(iv) of the IT Act keeping on the jurisdictional High Court decision in the case of Solid Container Ltd. (supra). 4.8 Having considered the appellant's submission, wherein the appellant's A/R specifically drawn my attention to the observation of Bombay High Court's judgment (supra) referred by the A. O., which is given on page no.421 of the decision, which is reproduced as under:- "The facts of the present case are entirely different as much as it was a loan taken for trading activity and ultimately, upon waiver the amount was retained in the business by the assessee. Thus, the principal stated by the Supreme Court in the case of T. V. Sundaeram Iyenger & Sons Limited (1996) 222 ITR 344 would be squarely applicable to t he facts of the present case. The amount which initially did not fall within the scope of the provisions rendering it liable to tax subsequently had become the assessee's income being part of the trading of the assessee." 4.9 The appella....
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....f loan, which was utilized by the appellant was for investment in shares. 4.12 Thus having taken note of appellant's submission and also the decisions cited therein, which clearly depicts the contention of the appellant company that the said loan was taken for purpose of long term investment, which is evident from appellant's submission as extracted above. Hence after taking note of jurisdictional High Court's decision of Solid Container Ltd. vs. DCIT supra) and Mahindra & Mahindra Ltd. reported in 261 ITR 501(Bom) and also the decision of Delhi High Court in the case of Jubiliant Securities Pvt. Ltd. (supra), I consider it proper and appropriate to hold that the A. O. was not correct in taxing the aforesaid waiver of loan as revenue receipt. Accordingly on the basis of aforesaid facts of the appellant's case and also having taken note of the legal position pronounced by various courts as extracted above, I consider it proper and appropriate to hold that the aforesaid waiver of loan is capital receipt and hence t he same is not taxable. Accordingly the addition made by the A. O. is deleted. These grounds of appeal are allowed." 5. We have analyzed the order of the learned CIT ....
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....re, it is crystal clear that the amount received by the assessee being waiver is chargeable to tax and hence, the same has rightly been added by the AO to the total income of the assessee. 6. On the other hand, the learned AR submitted that during the previous year the assessee had entered into One Time Settlement agreement with M/s. Mafatlal Finance Co. Ltd. in respect of amount payable against outstanding loan. Consequently, an amount of Rs. 12,17,18,379/- being no longer payable had been written off. It was further argued by the learned AR that vide letters dated 04-08-2010, 25- 08-2010 and 27-08-2010 submitted before the AO that for chargeability u/s 41 (1) of the Act there must be actual loan during the earlier year. Whenever the loan relatable is offered for taxation u/s 41(1) of the Act it has been claimed as deduction. However, in the case of principle amount, the assessee company has never been allowed any deduction as no deduction was made for the principle amount. However, the provision of section 41(1) of the Act is not applicable in respect of principle loan amount. In this regard the learned AR relied upon the decision of the Hon'ble Bombay High Court rendered in the....
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....are contrary to the written statements made by the assessee before the AO. But the learned CIT (A) has considered the depth of the stand taken by the assessee and the facts of the case and has rightly come to the conclusion that the said loan was taken for the purpose of long term investments and the learned CIT (A) has also taken note of the decisions of the Hon'ble jurisdictional High Court rendered in the case of (i) Solid Containers Ltd. Vs. DCIT [308 ITR 417] and (ii) Mahindra & Mahindra Ltd. Vs. CIT [261 ITR 501 (Bom.)] and the learned CIT (A) after considering the submissions recorded from Para 4.1 to 4.12 of his order has rightly come to the conclusion that the AO was not correct in taxing the aforesaid waiver of loan by treating the same as revenue receipt. No new material has been brought on record by the revenue to rebut/controvert the findings of the learned CIT (A). In view of the above, we find no reason to deviate from the findings of the learned CIT (A). Accordingly, we sustain the findings of the learned CIT (A) on this issue and dismiss the appeal of the Revenue. 8. The assessee in its C. O. No.155/Mum/155 has raised solitary ground that the learned CIT (A) ought....