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TMI Blog2014 (12) TMI 969X X X X Extracts X X X X X X X X Extracts X X X X ..... in any other manner, any amount in respect of such trading liability by way of remission or cessation of such liability - In that case, either the amount obtained by the assessee or the value of the benefit accruing to the assessee can be deemed to be the profits and gains of business or profession and can be brought to tax as income of the previous year in which such amount or benefit is obtained - it cannot be said that the assessee-company was carrying on business of obtaining loans and that the remission of such loans by the creditors of the company was a benefit arising from such business – thus, the amount waived by the lender bank is not an income u/s 2(24) of the Act and further Section 28 also does not include amount of loan waive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitutions etc. Since the said amount of interest was not paid, it was added back by the assessee while filing the returns of income for the earlier years. After deducting the said amount from the amount of reduction of loans and liabilities, the principal amount which got reduced/waived worked out of ₹ 6,74,54,77,332/-. This amount was added by the Assessing Officer u/s 41 r.w. explanation 2(iv) as well as section 28 (iv). 4. On appeal, the CIT(A) deleted the addition by following the decision of Hon ble Gujarat High Court in the case of CIT v. Chetan Chemicals Pvt Ltd., 267 ITR 770 (2004), the decision of the Hon ble Delhi High Court in the case of CIT v. Tosha International Ltd, 176 taxman 187 (Del) and the decision of the Bomba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved of ₹ 14,12,15,000/-is a capital receipt and therefore not chargeable to tax' The Assessing Officer requires the assessee that why the above receipt be not treated as income in the nature of business. The assessee replied to the Assessing officer that on settlement of dues with the bank, principal amount of loan has been partly waived by the lender pursuant to an agreement. The amount waived by the lender bank is not income u/s.2(24) of the income-tax Act. Further section 28 also does not include amount of loan waive by the lender. As the amount is not income, it is not charged u/s.4 or Section 5 or Section 56 of the Act. Further, Section 41 also does not apply to this receipt in respect of this amount, as no allowance or de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar date has been classified and divided between principal and outstanding interest. Since, in this case much more than the amount waived has already been allowed as interest in the earlier years, I am in full agreement with the AO that this amount would also be liable to be taxed u/s.41(1) of the Act because merely giving it a nomenclature of principal, the basis fact cannot be ignored that much more than this amount has already been allowed to the assessee as interest. In view of this, addition made by the AO is confirmed. Aggrieved, now the assessee came in second appeal before us. 9. At the outset, Ld. Counsel for the assessee stated that the issue is exactly covered in favour of the assessee and against the Revenue by the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness or profession in respect of which the allowance or deduction has been made is in existence in that year or not. On a reading of the provisions, it is apparent that before the section can be invoked, it is necessary that an allowance or a deduction has been granted during the course of assessment for any year in respect of loss, expenditure or trading liability which is incurred by the assessee, and subsequently during any-previous year the assessee obtains, whether in cash or in any other manner, any amount in respect of such trading liability by way of remission or cessation of such liability. In that case, either the amount obtained by the assessee or the value of the benefit accruing to the assessee can be deemed to be the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue. 6. He further submitted that this order of the Tribunal was carried in appeal by the Revenue and the Hon ble Gujarat High Court dismissed the appeal of the Revenue in Tax Appeal No.1905 of 2010, vide order dated 14.12.2011, by observing as under:- Facts are similar in the present case. The decision in the case of Chetan Chemicals Pvt. Ltd. (supra) covers the situation. Counsel for the Revenue was unable to establish that the amount of ₹ 14.12 crores represented any part of interest. From the Assessing Officers order we notice that the amount of ₹ 24.10 crores represented the principal amount an ₹ 14.12 crores and the unpaid interest of 9.98 crores both of which were waived by the Bank. Since we are not conce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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