TaxTMI 
TaxTMI 
2017 (2) TMI 920
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....d of Rs. 28,70,126/- on term loan as income chargeable to tax. He failed to appreciate that the said sum is a capital receipt and not taxable in hands of the assessee. 2. The learned CIT(Appeals) erred on facts and in law in upholding disallowance of Rs. 6,29,960/- being employees contribution to Provident Fund u/s 43(B) of the Act. 3. The issue raised by way of ground of appeal No.1 is against the addition made of Rs. 28,70,126/- holding the same to be capital receipt. 4. Briefly, in the facts of the case, the assessee for the year under consideration had filed the return of income declaring total income at Rs. 3,64,98,370/-. The assessee was engaged in the business of manufacture of forgings Automobile & Auto parts Industry and also....
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....ing the same under the head 'Other Income' in the Profit & Loss Account. However, in the computation of income, the discount so received was reduced from the business profits with note that the same needs to be adjusted in value of fixed assets which were acquired out of said loans. The CIT(A) held that the said contention of assessee was not legally sustainable and accordingly, net addition of Rs. 24,39,607/- was upheld in the hands of assessee. 7. The assessee is in appeal against the order of CIT(A). 8. The learned Authorized Representative for the assessee pointed out that the assessee had raised loan from DBS Bank which was foreign currency loan for capital investment. The terms of the loan were 30 months moratorium and 6 monthly ins....
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....'ble Bombay High Court in CIT Vs. Xylon Holdings Pvt. Ltd. (2013) 90 DTR 205 (Bom), wherein the earlier proposition of Hon'ble Bombay High Court in Solid Containers Ltd. Vs. DCIT (supra) was also taken note and it was held that where the loan was taken for the purpose of investment in capital asset, then the same was on different footing than the loan taken for trading liability 9. The learned Departmental Representative for the Revenue placed reliance on the orders of Assessing Officer and CIT(A). 10. We have heard the rival contentions and perused the record. The first issue which arises in the present case is vis-à-vis addition made to the income of assessee of Rs. 28,70,126/-. The assessee had raised loan in installments as per....
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....er amended agreement, it was provided that in case the first installment falling due in the financial year is paid in time, then there would be discount in respect of second installment. The total discount due to the assessee was Rs. 28,70,126/- for the year. 13. The issue which arises in the present appeal is the treatment of said discount received by the assessee. The assessee claims that the nature of said discount was capital and hence, the discount received is not to be treated its income in its hands. However, the case of Revenue, on the other hand is that the said receipts are to be taxed in the hands of assessee, where the assessee himself has treated as its income in the Profit & Loss Account. We find no merit in the said stand of....
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....r money. Hence, the Hon'ble Bombay High Court held that cessation of liability to repay loan liability was not taxable either under section 41(1) or 28(iv) of the Act. The decision of the Hon'ble Bombay High Court in Solid Containers Ltd. Vs. DCIT (supra) was held to be on completely on different facts, where the assessee had taken loan for business purposes. The relevant findings of the Hon'ble Bombay High Court are as under:- "8. Issue arising in this case stands covered by decision of this Court in matter of Mahindra & Mahindra. Decision of this court in matter of Solid Containers (supra) was on completely different facts and inapplicable to this case. Case of assessee was that the loan was a capital receipt and had not been claimed as....