TaxTMI 
TaxTMI 
TaxTMI 
2022 (7) TMI 999
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....e I.T. Act as loan taken for business purpose is written back without appreciating the decision of the Hon'ble High Court in the case of Solid Containers Ltd. v/s DCIT (2009) 308 ITR 417 (Bom) and Hon'ble Supreme court decision in the case of CIT v/s T.V. Sundaram lyenger & Sons Ltd (1998) 222 ITR 344. 2. On the facts and circumstances of the case and in law the Ld.CIT(A) has erred in deleting an addition of Rs. 1,51,53,000/- made u/s.56(2)(x) of the Act without appreciating strict provision of the Act. 3. The appellant craves leaves to alter, amend, withdraw or substitute any ground or grounds or to add any new ground or grounds of appeal on or before the hearing." 03. Brief fact of the case shows that assessee is an individual and derives income from salaries, house property, and other sources. For the purpose of business, assessee engages himself in providing commercial loans and the consultancy as well as investment in real estate. 04. Assessee filed his return of income on 19 September 2018 at Rs. 101,20,82,020/-. The case was selected for scrutiny and assessment order under Section 143(3) of the Income-tax Act, 1961 (the Act) was passed by the learned Assessing ....
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....v) of the Act are also not applicable since the same is in the nature of cash or money. Assessee relied on the decision of Hon'ble Delhi High Court in case of Logitronics (P.) Ltd. Vs CIT [2011] 197 Taxman 394 (Delhi), Hon'ble Bombay High Court in case of CIT vs. Soft works Computers (P.) Ltd. 354 ITR 16. The learned Assessing Officer rejected the contention of the assessee stating that the several judgments quoted do not apply to the facts of the case as the loan written back was taken for primary business activity of the assessee i.e. advancing to others for earning interest income. The learned Assessing Officer held that the amount of advance written back is a 'benefit' to the assessee arising from the business activity and is chargeable to tax under Section 28(iv) of the Act. The learned Assessing Officer relied upon the decision of Hon'ble Bombay High Court in case of Solid Containers Ltd. v/s DCIT (2009) 308 ITR 417 (Bom) and decision of Hon'ble Supreme Court in case of CIT vs. T.V. Sundaram Iyengar & Sons Ltd. [1996] 88 Taxman 429 (SC). Accordingly, addition of Rs. 42,45,000/- was made under Section 28(iv) of the Act. 07. Assessee on appeal before the learne....
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....ancing further. Further, write back is of the money and not in kind. He further relied on the decision of Hon'ble Bombay High Court in case of Essar Shipping Ltd. Vs. CIT 426 ITR 220 and Pr. Commissioner of Income Tax Vs. SICOM Ltd. in [2020] 274 Taxman 58 (Bombay). He further relied on Plethora of judicial precedents of Hon'ble High Court and co-ordinate benches. With respect to the decision of Solid Containers Limited (supra), he submitted that Hon'ble High Court had held that the loan was for business purposes and a direct nexus between its business and trading liability whereas, in the present case, the loan was taken for the capital of the assessee. He further stated that there is no evidence that the above loan was used for the purpose of business of the assessee. Instead, the balance sheet of the assessee shows that his business assets are funded by his business loans. In any way, there is no nexus of the loan written back with business of assessee. Referring to the decision of the learned CIT(A), he submitted that the decision of the Hon'ble Supreme Court was followed by him, which cannot be found fault with. In the end, he submitted that the waiver of loan ....
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....ofits 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." 012. In the present case the addition has been made by the LD AO u/s 28 (iv) of The Act r....
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....xable under Section 28(iv) of the Act also came up for consideration before this Court in the matter of Mahindra & Mahindra Ltd. (supra) and it was held there in that Section 28(iv) of the Act would apply only when a benefit or perquisite is received in kind and has no application where benefit is received in cash or money. 9. In view of the issue arising in this appeal being covered by the decision of this Court in the matter of Mahindra & Mahindra Ltd. (supra), no substantial question of law arises and both the questions are dismissed." [Underline supplied by us] 014. In view of this, we do not find any reason to disturb the appellate order of The LD CIT (A) on this issue. We confirm his findings that the write back of loan is not chargeable as business income u/s 28 (iv) of The Act. Accordingly, Ground No 1 of the appeal is dismissed. 015. The second ground of appeal raised by the learned Assessing Officer is with respect to the deletion of addition of Rs. 1,51,53,000/- under Section 56(2)(x) of the Act. The brief fact shows that during the year assessee has purchased several immovable properties in a project. The learned Assessing Officer noted that these immovable propert....
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....ence is less than 10% between agreement value and the stamp duty value, no addition can be made in view of the tolerance limit enhanced to 10 % from Five % by The Finance Act, 2020 with effect from 1st April, 2021. In holding so, he relied on the decision of Co-ordinate Bench in case of Maria Fernandes Cheryl (supra), Chandra Prakash Jhunjhunwala Vs. DCIT in ITA No.2351/Kol/2017 and Stalwart Impex Private Limited vs. ITO in ITA No.5752/Mum/2019 dated 02.07.2021. Thus, the learned Assessing Officer is aggrieved as per ground no. 2 against the deletion of the addition of Rs.1,51,20,900/-. 016. The learned Departmental Representative vehemently supported the order of the learned Assessing Officer. He submitted that 10% tolerance band limit adopted by the learned CIT (A) is applicable from A.Y. 2021-22 and not from A.Y. 2018-19. He submitted that the increase in tolerance band does not apply retrospectively. It was further stated that all the judicial precedent relied upon by the assessee has not reached finality and are not applicable for the impugned assessment year and therefore, the deletion of addition by the learned CIT (A) relying upon those decision is incorrect. 017. The lea....