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TMI Blog2015 (9) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... - u/s 28(iv) arising from waiver of principal amount in one time settlement scheme, in proceedings under Section 143(3) of the Income-tax Act, 1961 (in short 'the Act'). 2. The assessee-company manufactures Indian made foreign liquor. It filed its return on 20.09.2009 stating loss of Rs. 23,29,24,828/-. The A.O. took up 'scrutiny'. He inter alia noticed an interest outgo of Rs. 17,60,21,995/-. He was of the view that the assessee had utilized both unsecured and secured loan funding for mailing interest free advance to is associate concern M/s REPL. He opined that there was no commercial expediency involved therein and it had resulted in deprivation of financial sources only. He quoted history of this issue to have arisen in regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I have also gone through the decisions relied on by the A.O. and the AR. The facts of the case and submission of the ld.AR are similar to those of A.Ys 2002-03, 2004-05 and 2005-06. The issue has been elaborately discussed in the appellate order for A.Y.2002-203 in ITA No.813/09- 10/A.III dated 25.10.2010. It was seen from the working given by the appellant for various years that interest bearing fund of Rs. 3.25 crores had been advanced by it to REPL during the previous year relevant to A.Y.2000- 01. No further advance out of interest bearing fund had been made subsequently. Hence, interest @ 15 per cent on the advance of Rs. 3.25 crores amounting to Rs. 48.75 lakhs was held to be not allowable. Since no further advances were made out of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d issue involving addition of Rs. 2,25,13,704/- u/s 28(iv) of the Act. The assessee got sanctioned a term loan of Rs. 10 crores for its brewery Project. During financial year 2008-09, it had an outstanding loan of Rs. 3,29,99,927/-. The lender bank settled it through one time settlement scheme of Rs. 1,04,86,223/-. The assessee got benefitted by a sum of Rs. 2,25,13,704/-. It would treat this amount as a capital receipt since the loan had been availed for acquiring a capital asset; not to be included in its total income. The Assessing Officer referred to relevant loan documents and observed that the same had been obtained for servicing term loan of Rs. 9.4 crores already granted. He held that the same was a working loan to help in cost over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness. Indisputably, the assessee obtained the loan for the purpose of investing in its capital assets. A part of this loan with interest was waived under agreement between the parties. The amount referable to the loans obtained by the assessee towards the purchase of its capital asset would not constitute trading receipt. Therefore, the facts were totally different from the facts in CIT v. T.V. Sundaram Iyengar and Sons Ltd. [1996] 222 ITR 344 (SC). (iii) That section 28(iv) of the Act speaks about the benefit or perquisite received in kind and has no application to any transaction which involves money. The transaction in question being a loan transaction having no application with respect to section 28(iv) of the Income-tax Act, the sum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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