TaxTMI 
TaxTMI 
2021 (7) TMI 209
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....dated 16.03.2011, wherein this Tribunal by placing reliance on the Special Bench decision of the Tribunal in the case of Mukund Limited reported in 106 ITD 23 had decided the issue in Paras 7, 7.1 & 8 of the said Tribunal order dated 16.03.2011 against the assessee. Since this fact is not disputed by the parties before us, the operative portion of the said tribunal order is not reproduced herein for the sake of brevity. Respectfully, following the said order, the ground No.1:0 to 1:3 raised by the assessee are dismissed. 4. The Ground Nos. 2.1 to 2.3 raised by the assessee is with regard to challenging the addition made under section 41(1) of the Act. 5. We have heard the rival submissions and perused the materials available on record. The brief facts relevant with regard to this addition and the treatment given by the learned Assessing Officer with regard to the same, are that in the earlier years i.e. on 26 May 2000, the assessee had raised a rupee loan facility of Rs.90 crores from 'Bank of Nova Scotia;. This loan was obtained to finance capital expenditure and also to fund its general working capital requirements. During the year under consideration, the assessee entered into....
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....r in respect of principal portion of the loan and since, the amounts written back in the instant case represent only waiver of principal portion of the loan, the provision of Section 41(1) of the Act does not come into operation at all. The assessee had also filed a reconciliation of the liability involved and restructured through the restructuring agreement before the lower authorities. The aforesaid facts could be summarized by way of following table with the relevant figures for the sake of better appreciation of facts:- Particulars Amount (Rs.) Loan taken from Bank of Nova Scotia 90,00,00,000/- (Principal) Less: Conversion into Secured Redeembale 33,80,00,000/- Convertible Debentures Less: Settlement payment 9,69,40,000/- Balance Loan Remission 46,50,60,000/- 9. From the above table, it can be safely concluded that the amounts written back in the sum of Rs.46.50 crores purely represent principal portion of the loan and does not contain any interest element thereon. Admittedly, no deduction has been claimed by the assessee in earlier years in respect of the principal portion of the loan liability. Hence, the provisions of Section 41(1) of the Act can....
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....eived amortization benefit. Amortization is an accounting term that refers to the process of allocating the cost of an asset over a period of time, hence, it is nothing else than depreciation. Depreciation is a reduction in the value of an asset over time, in particular, to wear and tear. Therefore, the deduction claimed by the Respondent in previous 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 ....
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....he issue in dispute before us on the taxability under section 41(1) of the Act. Accordingly, grounds Nos. 2.1 to 2.3 raised by the assessee are allowed. 12. The last issues to be decided vide ground Nos. 3:1 to 3:3 raised by the assessee are with regard to disallowance of swap charges on loans obtained by the assessee. 13. We have heard the rival submissions and perused the materials available on record. It is not in dispute, the assessee has availed loan from US Bank on floating rate of interest. The assessee choose to convert the said loan carrying floating rate of interest into fixed rate of interest. The assessee was asked to pay certain swap charges for the said conversion from floating to fixed rate. This swap charges liability had been duly incurred by the assessee during the year. The assessee had characterized the said swap charges in the nature of interest. This was sought to be disallowed by the learned Assessing Officer on the ground that the said expenditure is capital in nature. We find that the learned CIT(A) has also given categorical finding that assessee converting the loan from floating rate of interest to fixed rate of interest has derived enduring benefit and....
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....rrent finding of facts are not shown to be perverse in any manner. In fact, the Assessing Officer also in the Assessment Order does not find that the transaction entered into by the Respondent assessee was speculative in nature. It further holds that at no point of time did Revenue challenge the assertion of the Respondent assessee that the activity of entering into forward contract was in the regular course of its business only to safeguard against the loss on account of foreign exchange variation. Even before the Tribunal, we find that there was no submission recorded on behalf of the Revenue that the Respondent assessee should be called upon to explain the nature of its transactions. Thus, the submission now being made is without any foundation as the stand of the assessee on facts was never disputed. So far as the reliance on Accounting Standard-11 is concerned, it would not by itself determine whether the activity was a part of the Respondent-assessee's regular business transaction or it was a speculative transaction. On present facts, it was never the Revenue's contention that the transaction was speculative but only disallowed on the ground that it was notional. La....