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TMI Blog2017 (11) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... Court further found that since the loan borrowed was used for purchase of capital asset, it is a capital receipt. Thus this Tribunal is of the considered opinion that the loan amount waived by ICICI Bank has to be necessarily considered as revenue receipt, hence, it is taxable. Therefore, this Tribunal do not find any reason to interfere with the orders of the lower authority and accordingly the same are confirmed. Allowance of pre-operative expenses - Held that:- CIT(Appeals) found that the assessee showed the pre-operative expenses to the extent of ₹ 2,36,27,733/- in the balance sheet as on 31.03.2003. However, what was written off is only ₹ 1,81,54,653/- as per the Profit & Loss account for the financial year 2003-04. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that there was sufficient cause for not filing these appeals before the stipulated time. Therefore, we condone the delay and admit the appeals. 3. The first issue arises for consideration is assessment of waiver of principle amount of loans. 4. Sh. R. Vijayaraghavan, the Ld.counsel for the assessees, submitted that the CIT(Appeals) by placing reliance on the judgment of Madras High Court in CIT v. Ramaniyam Homes P. Ltd. (2016) 384 v. 530, found that the waiver of loan amount would constitute income under Section 28(iv) of the Income-tax Act, 1961 (in short 'the Act') being the benefit arising in the course of business. The Madras High Court in another case in Iskraemeco Regent Ltd. v. CIT (2011) 331 ITR 317 found that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business, hence, it is assessable as income. Placing reliance on the judgment of Madras High Court in Ramaniyam Homes P. Ltd. (supra), the Ld. D.R. pointed out that the Division Bench of the Madras High Court, after referring to its earlier judgment in Iskraemeco Regent Ltd. (supra), found that when a portion of the loan is waived, the total amount of loan shown on the liabilities side of the balance-sheet is reduced and the amount shown as capital reserves, is increased to the extent of waiver. Accordingly, the Division Bench found that the earlier Division Bench in Iskraemeco Regent Ltd. (supra) had not taken note of the facts. In view of subsequent judgment of Madras High Court, according to the Ld. D.R., the CIT(Appeals) has rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as deduction under section 36(1)(iii), in computing the income referred to in section 28. But, the proviso thereunder states that any amount of interest paid in respect of capital borrowed for acquisition of an asset for extension of existing business or profession, whether capitalised in the books of account or not for any period beginning from the date on which the capital was borrowed for the acquisition of the asset, till the date on which such asset was put to use, shall not be allowed as deduction. 43. Therefore, it is clear that the moment the asset is put to use, then the interest paid in respect of the capital borrowed for acquiring the asset, could be allowed as deduction. When the loan amount borrowed for acquiring an as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... araghavan, the Ld.counsel for the assessee, submitted that the Assessing Officer disallowed ₹ 1,81,54,653/- towards pre-operative expenses. According to the Ld. counsel, the assessee was having two divisions one is Culture Centre and another is Essential Oil Division. The assessee incurred revenue expenditure like interest, losses due to exchange rate fluctuation, which was debited to pre-operative expenses. Since the unit began to operate during the assessment year under consideration, according to the Ld. counsel, the assessee charged the preoperative expenses to the Profit Loss account and claimed the same as deduction. However, the Assessing Officer rejected the claim of the assessee on the ground that the assessee has claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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