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TMI Blog2017 (5) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturing business of cement. The assessee in the year under consideration has claimed an expense of Rs. 32,44,228/- under the head "major repairs" by debiting in profit and loss a/c. The assessee has treated such expenses as current repairs and claimed the deduction in the profit and loss a/c. However, the AO was of the view that the major repair expenses require the replacement of the components used in the machinery to keep them under good running condition. Thus, the instant major repair expenses are capital in nature and same cannot be claimed as deduction u/s 30 or 37 of the Act. Accordingly the AO treated the major repair expense of Rs. 32,44,228/- as capital in nature and added to the total income of assessee. 4. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that the expense was classified under the head major repair and maintenance on the ground that the large expense was spent on repair and maintenance but the fact is that there was no enhancement in the capacity of the plant and machinery as well as no increase in the efficiency. There was no purchase of any new equipment under the category of plant and machinery. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 45.53 " 3. Raw Mill Sections Rs.224.90 " 4. Kiln Rs. 79.89 " 5. Coal Mill Rs. 25.10 " 6. Clinker Grinding Section Rs. 60.24 " 7. Slag Grinding Section Rs. 53.39 " 8. Packing Plant Rs. 4.63 " 9. Miscellaneous Rs. 5.64 " Total Rs.526.46 " Ld. counsel for the assessee before us contended that due to unsatisfactory financial position of the company for few years in the past, it could not undertake the repair and maintenance of plant and machinery and its capacity utlisation was n the range of 37.46% against the industry average of 90. According to him to make the situation improve, the assessee company in FY 2006-07 relevant to AY 2007-08 undertook the overdue repairs and maintenance for plant and machinery and repair and replacement of internal control purpose was started. The assessee company has not increased in the rated capacity of any of the plant/equipment by virtue of this repair and maintenance. Factually, the assessee has carried out repairs and maintenance, as is evident from the above discussion. In similar circumstances, Hon'ble Bombay High court in the case of CIT vs. Chowgule & Co. Pvt. Ltd. (1995) 214 ITR 523 (Bom) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent role to play in the mill and the output of each division is different from the other." Respectfully following the precedent as above we hold that there is no infirmity in the order of the Ld. CIT(A). Accordingly, we uphold the same. This ground of Revenue's appeal is dismissed. 7. Next issue raised by Revenue in this appeal is that Ld. CIT(A) erred in deleting the addition made by AO for Rs. 5.66 crores on account of debts written back . 8. The assessee in the year under consideration has settled its loan from the M/s Asset Reconstruction Company Ltd. (ARCL for short) wherein waiver of loan for an amount of Rs. 5.66 crores was allowed to it. The assessee has credited its profit and loss a/c by the amount of loan which was waived off by the ARCL. However, the assessee at the time of assessment proceedings filed revised computation of income wherein the amount of loan which was waived off was deducted from the profit of the assessee. The assessee also submitted that the aforesaid amount of waived loan has never been claimed as deduction in its profit and loss a/c and the same was wrongly credited in the profit and loss a/c. However, the AO disregarded the contention of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favourable to them. 11. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the instant relates to the gain which assessee has received on account of settlement of the loan. It is undisputed fact that the amount of loan waived off by ARCL represents the principal amount. The assessee treated waiver off of the principal amount of loan non-taxable item on the ground that it was utilized for the capital transaction and it does represent the trading liability. However the AO treated the same as income of the assessee in terms of the provisions of section 28(iv) of the Act. Now the question arises for our adjudication so as to whether the loan amount written off is income as per the provisions to section 28(iv) of the Act which reads as under : 28(iv) of the Act which reads as under:- "Profits and gains of business or profession. 28. The following income shall be chargeable to income-tax under the head "Profits and gains of business or profession",- (i) ... ... (ii) ... ... (i) ... .. [(iv) the value of any benefit or perquisite, whether convertible to money or not, arising from business or the exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the working capital which would have formed part of the earlier years income. According to the Assessing Officer since the loans ceased to exist, this amounted to cessation of liability and, therefore, it has to be treated as an income. Consequently, the Assessing Officer added the said sum of Rs. 10.47 crores in the income of the assessee. The Commissioner of Income-tax (Appeals) deleted the addition by observing that the remission of the principal amount of loan did not amount to income under section 41(1) nor under section 28(iv) nor under section 2(24) of the Income-tax Act, 1961 (hereinafter referred to as the 'said Act'). 3. The revenue went in appeal before the Tribunal against the order of the Commissioner of Income-tax (Appeals) with regard to the deletion of the said sum of Rs. 10.47 crores. We note that the Tribunal has examined the case in detail and particularly from the standpoint of the provisions of section 41(1) of the said Act. The Tribunal has observed as under:- "As per our considered view, for attracting the provisions of section 41(1), the first requisite condition to be satisfied is that the assessee should have got deduction or benefit of al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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