TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 1062
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....) has erred in holding that Assessing Officer was not justified for making addition of Rs. 51,66,613/- towards interest subsidy received during the relevant previous year. 4. That the assessee craves for leave to add, delete, amend or modify any ground before or at the time of appellate proceedings. 3. Ground No. 1 raised by the Revenue relates to waiver of loan of Rs. 1,26,93,133/- 4. Brief facts qua the issue are that during the relevant previous year, the assessee company entered into one time settlement with Catholic Syrian Bank for write off its loan amounting to Rs. 193,62,653/- upon payment of Rs. 220 lacs out of the total outstanding loan and overdue interest on such loan of Rs. 413,62,653/-. The assessee furnished compromise proposal letter dated 03.12.2009 of the Catholic Syrian Bank. The Break-up of the amount of interest and loan written off during the previous year is as under- Interest Rs. 66,69,520 Principal of loan Rs. 126,93,133 Total Rs. 193,62,653 The assessee credited the amount of Rs. 193,62,653/-, written off, in the profit and loss account but claimed the same to be exempt from tax in its computation of income. During the scrutiny proceedings....
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....ets of Rs. 1885.24 lacs during the year ended 31st March, 2005 without obtaining any loan from any source. The ld Counsel pointed out that assessee had already submitted before the ld CIT(A), a chart showing utilization of fund for acquisition of Capital Assets visa- vis sources of fund for the last 6 years prepared on the basis of the Audited Annual Accounts. It is evident from the chart that the working capital had been utilized for the purpose of acquiring capital assets. Therefore, ld Counsel prayed the Bench not to treat the amount of loan waived as taxable and order of ld CIT(A) be upheld. 8. We heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that the assessee company had total loan of Rs. 346.59 lacs comprising of cash credit facility of Rs. 240.90 lacs and Term Loan of Rs. 102.03 lacs from the Catholic Syrian Bank. It would be pertinent to note that the assessee company had term loan of Rs. 102.03 lacs which is evident from the Annual ac....
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....rian Bank which is evident from the Annual Accounts for FY 2008-09 ( page 28 of the paperbook). A copy of Annual Report for the FY 2008-09 is furnished before the Bench ( pages 1-43 of the paperbook). In the course of the hearing before the AO, the assessee company submitted that the cash credit facility had been utilized by the company towards purchase of capital assets. The company had purchased capital assets ofRs. 18.85 crores approx during the FY 2004-05. A detailed statement of acquisition of fixed assets is furnished before us ( page 44 of the paperbook). A copy of Annual Accounts for the FY 2004-05 is also furnished ( pages 45-55 of the paperbook), which shows that the capital asset amounting to Rs. 18.85 crores was acquired during the FY 2004-05 ( page 50 of the paperbook). Also on perusal ofthe annual accounts of the company, it can be seen that the company had not obtained any fresh term loan during the relevant financial year and thus assets were purchased from the cash credit facilities. In other words, funds from the cash credit facility were diverted to purchase capital asset. We note the chart given by the assessee shows utilization of fund for acquisition of capita....
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....-tax under the head "Profits and gains of business profession",- (iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession; 13. On a plain reading of Section 28 (iv) of the IT Act, prima facie, it appears that for the applicability of the said provision, the income which can be taxed shall arise from the business or profession. Also, in order to invoke the provision of Section 28 (iv) of the IT Act, the benefit which is received has to be in some other form rather than in the shape of money. In the present case, it is a matter of record that the amount of Rs. 57,74,064/- is having received as cash receipt due to the waiver of loan. Therefore, the very first condition of Section 28 (iv) of the IT Act which says any benefit or perquisite arising from the business shall be in the form of benefit or perquisite other than in the shape of money, is not satisfied in the present case. Hence, in our view, in no circumstances, it can be said that the amount of Rs. 57,74,064/- can be taxed under the provisions of Section 28 (iv) of the IT Act. 14. Another important issue which arises is the applicability of....
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....revious assessment years was due to the deprecation of the machine and not on the interest paid by it. 16. Moreover, the purchase effected from the Kaiser Jeep Corporation is in respect of plant, machinery and tooling equipments which are capital assets of the Respondent. It is important to note that the said purchase amount had not been debited to the trading account or to the profit or loss account in any of the assessment years. Here, we deem it proper to mention that there is difference between 'trading liability' and 'other liability'. Section 41 (1) of the IT Act particularly deals with the remission of trading liability. Whereas in the instant case, waiver of loan amounts to cessation of liability other than trading liability. Hence, we find no force in the argument of the Revenue that the case of the Respondent would fall under Section 41 (1) of the IT Act. 17. To sum up, we are not inclined to interfere with the judgment and order passed by the High court in view of the following reasons: (a) Section 28(iv) of the IT Act does not apply on the present case since the receipts of Rs. 57,74,064/- are in the nature of cash or money. (b) Section 41(1)....
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....Rs. 137919/-. 13. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer. Aggrieved by the order of the ld. CIT(A), the Revenue is in appeal before us. 14. The ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity. On the other hand, the ld. Counsel for the assessee defended the order passed by the ld CIT(A). 15. We have heard both the parties and perused the material available on record. We note that ld Counsel for the assessee submitted copies of the invoices towards purchase of fixed assets and contended that the machineries were received well before 31/03/2010. It is further submitted that the machineries were duly installed within 31/03/2010 as the same was in knock down condition. TheldCounsel further submitted that the A.O. misunderstood the facts that RC date mentioned on the face of the invoice as date of receipt. In fact the RC date is the date of receipt of invoice at Head office. It is evident from the details....
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....idy received during the relevant assessment year. (A copy of letter regarding clarification on central interest subsidy scheme is enclosed at pages 79-81 of the paperbook). We note that point no. L of note 1 of schedule 17 of the Annual accounts for AY 2010-11 relate to accounting policy of Government grant( page 93 of the paperbook) which is reproduced as under: "[L] GOVERNMENT GRANTS: (i) Claims receivables are accounted for at the time of lodgement depending on the certainty of receipt. " (A copy of Annual Accounts for AY 2010-11 is attached at pages 82-97 of the paper book)" Therefore, we note that claims are accounted for at the time of lodgment. The Ld. AO without going on to the facts of the case added interest subsidy received during the year which was already taxed in earlier years. The detailed breakup of the interest subsidy receivable is furnished by assessee at page 98 of the paperbook. We note that notes to accounts for AY 2009-10 [note no. 5, attached at page 36 of the paperbook] and AY 2010-11 [note no. 5, attached at page 94 of the paper book], which clearly brings out that interest subsidy has already been accounted on accrual basis in preceding years.....