9911796707
TMI Blog2019 (12) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... on while computing income of the assessee chargeable to tax without making any enquiry which was certainly warranted based on facts and circumstances of this case before allowing entire capital work in progress existing upto ay: 2002-03 as Revenue expenses in this year viz. ay: 2003-04 is clearly erroneous and prejudicial to the interest of Revenue and learned CIT rightly interfered by invoking his revisionary powers u/s 263 of the 1961 Act. The AO simply accepted the contentions of the assessee that the assessee has made claim of deduction of lower interest but has not directed its enquiry as to whether any benefit or cessation or remission of liability has taken place which is required to be brought to tax u/s 41(1) or Section 28(iv) or any other relevant section of the 1961 Act. Thus, under these circumstances, the assessment order passed by AO is erroneous so far as is prejudicial to the interest of Revenue and the learned CIT rightly invoked its revisionary powers u/s 263 of the 1961 Act, which action of learned CIT we upheld/confirms. We order accordingy. Appeal of the assessee dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... dit of ₹ 139.96 lakhs and ₹ 16.78 crores given to an Associate Company, viz. SPEL Semi Conductor Ltd. in the light of the law laid down by the Apex Court in the case of S.A. Builders vs. CIT and others (288 ITR 1 (SC)). 4.1. The Commissioner of Income Tax has erred in directing the assessing officer to examine the fact whether the Inter Corporate Deposit (ICD) of ₹ 675 Lakhs made by the Appellants during the year 1999 were made out of their own funds or borrowed funds and decide the question of allowability of interest on such ICDs. This will amount to revision / reopening of earlier year's assessment. 4.2. Without prejudice, the Commissioner of Income Tax ought to have considered the fact that the Appellants have sufficient general reserve during the relevant period of investment. The Commissioner of Income Tax ought to have further considered that the Appellants have reported a profit of ₹ 2837.26 lakhs for the assessment year 2000-2001 (Financial year 1999-2000) and also carried forward a general reserve of ₹ 23924.42 lakhs as on 31.3.2000. As per the cash flow statement for the year ended 31.3.2000 annexed to the Annual Report for the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income with Revenue for impugned assessment year viz. ay: 2003-04 on 23.10.2003 declaring loss of ₹ 403,84,01,506/-. The said return of income was processed by Revenue u/s 143(1) of the 1961 Act on 12.03.2004. The assessee also filed revised return of income on 30.03.2004 declaring loss of ₹ 298,10,70,500/- . In this revised return of income filed on 30.03.2004 , the assessee offered interest income of ₹ 105.73 crores. The case of the assessee was selected for framing scrutiny assessment by AO u/s 143(3) read with Section 143(2) of the 1961 Act. The AO issued statutory notices u/s 143(2) and 142(1) of the 1961 Act to the assessee and finally scrutiny assessment was framed by AO u/s 143(3) of the 1961 Act, vide assessment order dated 30.03.2006 passed by AO u/s 143(3) of the 1961 Act , assessing loss of the assessee at ₹ 342,32,81,858/-. 4. The Commissioner of Income-tax , Chennai-III, Chennai in exercise of its revisionary powers u/s 263 of the 1961 Act on perusal of the records for ay: 2003-04 observed that assessment framed by the AO u/s 143(3) vide assessment order dated 30.03.2006 is erroneous so far as is prejudicial to the interest of Revenue which l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o ₹ 139.96 lakhs has been set off against the total interest payment of ₹ 17942.64 lakhs and net interest payment of ₹ 17802.62 lakhs. While completing the disallowance of interest on borrowed funds a sum of ₹ 17802.62 lakhs have been adopted as against ₹ 17942.64 lakhs which represents interest liability towards secured/unsecured loans and disallowance requires rectification. You have invested sum in equity granted loans and advances to its subsidiary/ associate companies and that interest and other recoverable that are due from M/s Tuticorin Alakalies & Petro Chemicals, MPL, SPEL Semiconductor Ltd., In the Schedule to Notes on Accounts it has been stated that entire amount of unsecured loans from promoters was due to you and that no provision has been made for interest on ₹ 16.78 crores brought in by the promoters. While computing the disallowance of proportionate interest on borrowed capital the amount of ₹ 16.78 crores given by you to your associate SPEL had not been taken into account. In the Notes on account 13(a) it is seen that ₹ 672 lakhs had been placed as inter corporate deposits on which no interest had been received. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notes (FRNs) -₹ 116.28 crores It has been observed by the Learned Commissioner of Income Tax, Chennai-III in the Revision Notice that the interest of ₹ 7760.49 lakhs and an exchange fluctuations (net) of ₹ 3867.35 lakhs charged off to the Profit and Loss account during the relevant assessment year was erroneously allowed by the assessing officer while completing the assessment. In this connection, it is informed that the assessee Company borrowed 120 million US$ against unsecured Floating Rate Notes (FRNs) during the year 1996 towards financing the import of capital goods for its operations and projects in which it was involved and for general corporate purposes. A copy of the offer document dated 11.1.96 along with full details of the above revenue expenditure was filed before the assessing officer vide our letter dated 5.7.2006. As seen from Page No.20 of the Offer document, the net proceeds of the issue was expected around US$ 118.06 million after expenses and the same will be applied by the assessee Company towards financing the import of capital goods for its operations and projects in which it is involved and for general corporate purposes permitted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the above unsecured loan during the assessment years 1997-1998 to 2000- 2001 was ₹ 20905.10 lakhs. Out of the :above, interest amounting to ₹ 3195.63 lakhs was capitalised during the relevant assessment years and interest amounting to ₹ 9948.98 lakhs was charged to Profit and Loss account. The balance interest of ₹ 7760.49 lakhs was carried in the capital work in progress account in order to capitalise the same in the future projects/expansion schemes. The Company envisaged certain future projects and desired to capitalise the interest and exchange fluctuation carried in the capital work in progress account. The total amount carried by the Company in the capital work in progress account at the end of the assessment year 2003-2004 was ₹ 11627.84 lakhs (Interest ₹ 7760.49 lakhs + Exchange fluctuation ₹ 3867.35 lakhs), which related to the assessment years 1997-98 to 2000-2001. As no further expansion schemes were undertaken or envisaged by the Company, the Company had charged off the entire amount of ₹ 11627.84 lakhs to the Profit and Loss account in the assessment year 2003-2004, as it represented the interest and exchange fluctu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.42 lakhs The asset written off amounting to ₹ 202.42 lakhs represents the Written Down Value (WDV) of the crank shaft attached with the DG set maintained by the Pharmaceutical Division of the assessee Company, which was used for the purpose of manufacture of pharmaceutical products. The WDV of the crank shaft as on 31.3.2003 as per Books of Account was ₹ 290.99 lakhs. After setting of the insurance claim received amounting to ₹ 88.57 lakhs, the net value written off by the assessee Company was ₹ 202.42 lakhs. The same was claimed as business loss as per Sec. 32(1) (iii) of the Income Tax Act, 1961. 3) Interest Disallowance The disallowance of interest of ₹ 3151.15 lakhs made by the assessing officer vide Para 6.3 of the assessment order dated 30.3.2006 has been challenged by the assessee Company before CIT(A) and the appeal is still pending. The interest disallowance of ₹ 3151.15 lakhs was computed by the assessing officer on the advances made by the assessee Company to its Subsidiary and Group companies and pending as at the end of the relevant assessment year. The details of business nexus of the assessee Company with such subsidiary/gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notes on Accounts annexed with the audited annual report of the assessee Company for the year 2002- 03 (assessment year 2003-04), ₹ 675 lakhs had been placed as Inter Corporate Deposit (ICD) on certain companies. The above ICDs were placed by the assessee Company during the year 1999- 2000. As seen from the audited Annual Report for the year 1999- 2000 (Assessment year 2000-01), the Company has reported a profit of ₹ 2837.26 lakhs and carried a general reserve of ₹ 23924.42 lakhs as at 31.3.2000. It is evident that the above ICDs were placed by the assessee company only from its own funds and no borrowed funds were utilised for the said purpose. Therefore, the question of disallowance of any interest on such ICDs does not arise. 5) Interest relief of ₹ 4110.36 lakhs given by the Bankers to the Company The statutory auditors of the Company vide Item No.!4 of the Notes on Accounts annexed with the audited annual report for the year 2002-03 have observed1 as follows; "The CDR cell approved the package vide its letter dated I9th March 2003, giving certain terms and conditions for the business and financial restructuring including sharing of security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total relief of ₹ 4110.36 lakhs disclosed in the Notes on Accounts of the previous assessment year (i.e. 2003- 04). Had the assessee Company accounted interest expenditure at normal rates, it would have claimed more interest expenditure since the interest cost would have been higher to the extent of Rs.R83.98 lakhs pertaining to the assessment year 2003-04. Since the assessee Company had accounted the interest expenditure only at the reduced rate of interest, the above amount has been disclosed as savings availed by the assessee Company, subject to the approval of two lenders. Therefore, your proposal to consider the amount of interest relief of ₹ 883.98 lakhs pertaining to the financial year 2002-03 (assessment year 2003-04) as income, does not arise in this case. 6) Final Prayer In view of the foregoing reasons, the assessment done by the assessing officer vide his order dated 30.3.2006 u/s 143(3) of Income Tax Act 1961, is in order and no; revision is required by the learned Commissioner of Income Tax u/s 263 of the Income Tax Act 1961. Therefore, it is prayed that further proceedings on account / of the above Notice dated 24.10.2007 may kindly be dropped." 4.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SPIC was based on the application of funds for the purpose of acquiring the capital assets. The unallocated portion of the funds was in the Company's system with an ultimate objective of purchase of capital goods in the future. Since the borrowal through FRNs was made in foreign currency (i.e. US$), the loan liability was valued at the end of each Financial Year and the loan liability restated by the Company in the balance sheet in the respective years. The difference between the loan liability of the previous and current year (either gain or loss) was treated as exchange fluctuation and the same was allocated/adjusted on the cost of assets based on the application of funds on these assets. During the assessment years 1997-1998 to 2000-2001, the total exchange loss incurred by the Company was ₹ 15128.07 lakhs. Out of ₹ 15128.07 lakhs, exchange loss capitalised based on the allocation of funds for capita! expenditure purpose was ₹ 7235.26 lakhs. The exchange fluctuation charged to Profit and Loss account during the relevant assessment years was ₹ 2753.64 lakhs. The balance exchange fluctuation amounting to ₹ 5139.17 lakhs was carried in the capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In view of the above reasons, the Company had claimed the same as Revenue Expenditure in its Regular Income Tax return for the assessment year 2003-2004. A statement containing the overall movement of allocated/unallocated FRN funds, interest and exchange fluctuation thereon capitalised, charged to Profit and Loss account and carried on in the capital work in progress account for the assessment years 1997-98 to 2003-2004 are enclosed as Annexure-II, III and IV, for your kind perusal. The receipt of this letter along with the enclosures may kindly be acknowledged." The aforesaid reply was accepted by the AO and no additions were made to the income of the assessee while framing assessment u/s 143(3) of the 1961 Act. 4.4.2 The AO while framing original assessment also made enquiries as to write off written down value of ₹ 202.42 lacs of DG Set during assessment proceedings and the assessee vide reply dated 09.03.2006 (page 57/pb), replied as under: "III. ASSETS WRITTEN OFF Pharmaceutical Division - ₹ 202.42 lakhs As desired by your goodself, we are enclosing a statement (Annexure-VII) containing the details of the historical cost of DG set scrapped and its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Kedaranath Jute Manufacturing Company Ltd., Vs CIT(82 ITR 363) that only such expenditure that accrues in a year under mercantile system of accounting is allowable as a deduction from the profits of that year. This ratio was again confirmed by the Supreme Court in the case of CIT Vs M/s Kalinga Tubes Ltd.,(218 ITR 164).Thus any expenditure not being capital in nature laid out expanded wholly and exclusively for the purpose of business during the accounting year is only allowable as a deduction which the Supreme Court had upheld in various decisions. The interest paid on loans and exchange fluctuation loss thereon has already been capitalised in the books by the assessee. The relevant expenditure obviously related to the earlier years upto the previous year ended 31.3.2000. When this is so, the assessee cannot bring it back from the capital work in progress account and charge it off as revenue expenditure in the current year. It has been held by the Supreme Court that the accounting practice cannot override the mandatory provisions of the Income Tax Act vide Tuticorin Alkali Chemicals and Fertilizers LTd., Vs CIT (227 ITR 172), Hence the deduction of expenditure of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short term capital loss would arise subject to the condition that the block assets concerned ceases to exist or the moneys payable exceed the WDV of that block. In the instant case since the closing WDV of the block still exists no other term likes would arise. The fact that the loss of this asset had been treated differently in the books of accounts would not alter this statutory position. Therefore, a sum of ₹ 202.42 lakhs representing write off in the honks of depreciable assets was only a capital loss in nature and could not be allowed as a revenue expenditure for IT purposes. While completing the assessment by order dated 30.3.2006, the AO failed to apply his mind to this claim for deduction. Hence, the assessment order is rendered erroneous and prejudicial to the interest of revenue. I therefore direct the AO to carry out a fresh examination of the claim as preferred by the assessee." III & IV) Disallowance of Interest with respect to advances to Associated Concern - SPEL Semi Conductor Limited & Set off of interest received against interest expenses while making disallowance of Interest Expenses-Decision of learned CIT u/s 263 of the 1961 Act "4.2 I have carefu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2006 had not considered the above issue in its proper perspective with due application of mind. I therefore direct the AO to examine the issue afresh in the light of the assessee's reply extracted above and decide the matter in accordance with law. The A.O. will of course be entitled to call for further evidence for this purpose as may be required and to examine the same. No doubt before passing any such fresh assessment order, the assessee should be given reasonable opportunity of being heard." 5. Aggrieved by decision of learned CIT treating assessment order dated 30.03.3006 passed by AO u/s 143(3) of the 1961 Act as erroneous so far as prejudicial to the interest of Revenue vide revisionary order dated 05.02.2008 passed by learned CIT u/s 263 of the 1961 Act , the assessee has filed an appeal with tribunal challenging the revisionary order dated 05.02.2008 passed by learned CIT u/s 263 of the 1961 Act . The learned counsel for the assessee opened arguments before the Bench and submitted that ground number 1 and 1.1 raised by assessee in concise ground of appeal filed with tribunal are general in nature. With respect to first effective ground number 2 , it was submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said order cannot be said to be erroneous so far as prejudicial to the interest of Revenue. 5.1.2. On the next effective ground it was stated by learned counsel for the assessee that the assessee has claimed asset written off amounting to ₹ 202.42 lacs representing written down value of the crank shaft attached with DG Set maintained by Pharma division of the assessee, which was used for manufacture of pharmaceutical products. The learned counsel for the assessee submitted that said amount represents w.d.v. of the said cranks shaft after adjusting insurance claim received by it , while balance amount is written off and charged to P&L account by invoking provisions of Section 32(1)(iii) of the 1961 Act. 5.1.3 On the next effective ground of disallowance , it was submitted by learned counsel for the assessee that earlier AO has disallowed interest expenses to the tune of ₹ 3151.15 lacs which was allowed by learned CIT(A). It was submitted that learned CIT invoked revisionary powers to direct AO to look into disallowance of interest with respect to advances made to another group concern namely SPEL Semiconductor Limited to the tune of ₹ 16.78 crores , which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awn to revisionary order passed by learned CIT u/s 263 of the 1961 Act and prayers are made to uphold the same. Regarding second effective ground, it was submitted that crank shaft was attached to DG Set of whose wdv value after netting with the insurance claim received was written off in books of accounts in P & L account as Revenue expenses and by stretch of no imagination, it could be said that crank shaft attached to DG set is an undertaking and the assessee erred in relying on provisions of Section 32(1)(iii) of the 1961 Act. It was submitted that said crank shaft attached to DG Set was part of Block of Asset and the said block of Asset has not ceased to exist as the end of the previous year and hence Section 50 of the 1961 Act is applicable. The prayers were made to sustain the revisionary order passed by learned CIT u/s 263 of the 1961 Act. Regarding next issue , it was submitted that so far as ICD are concerned wherein claim is made that the assesse has own funds which are sufficient to make these ICD, the learned CIT has only directed AO to look into the merits of the contentions of the assessee. Similarly, it was stated by learned CIT-DR that on other issue no prejudice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on each of the issue's raised by learned CIT in its SCN , submitting that assessment order passed by the AO is neither erroneous nor prejudicial to the interest of Revenue within the meaning of Section 263 of the 1961 Act. We have duly extracted said reply filed by assessee in preceding para 4.3 of this order. The learned CIT then proceeded to pass revisionary orders u/s 263 of the 1961 Act, dated 05.02.2008 holding that assessment order dated 30.03.2006 passed by AO u/s 143(3) of the 1961 Act is erroneous so far as is prejudicial to the interest of Revenue within meaning of Section 263 of the 1961 Act on all the six issues/grounds raised by learned CIT in its SCN and accordingly necessary directions were given by learned CIT in its order. We have also enumerated decision of learned CIT vide revisionary order dated 05.02.2008 passed u/s 263 of the 1961 Act on all the six issues in preceding para 4.6 of this this order. The assessee being aggrieved has come in appeal before us and contentions are raised by both the rival parties to support their stand. We have carefully heard both the parties and perused entire material on record including orders of authorities below and cited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital assets for other divisions of the assessee and such capital assets were utilized for the purposes of the business of the assessee. So far there is no difficulty as this issue is not before us for adjudication . Then, the assessee also , inter-alia, used proceeds of FRN issued in 1996 for working capital purposes and the interest on FRN and foreign exchange fluctuation loss was charged off to Profit and Loss Account as Revenue expenses from year to year . Again, there is no difficulty for us as this issue is not before us for adjudication . The assessee has clarified that the funds which are used by it for acquisition of capital assets as well for working capital purposes were allocated funds out of proceeds of FRN issued by assessee . The difficulty has arisen so far as unallocated funds out of proceeds of FRN received by assessee as far as back in 1996, which had remained unallocated since 1996 till the end of previous year ending on 31.03.2003. The assessee raised FRN in 1996 which are due for maturity/redemption in 2003 and we are seized of previous year 2002-03 relevant to ay: 2003-04 ,and 2003 is the year of maturity and repayment of these FRN as these FRN's are due for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted purposes and unallocated FRN issued as far as back in 1996 was either kept in escrow account maintained with bank or bank accounts or in FDR's or government securities or other permitted purposes etc. and there is no diversion of said funds . There is also no explanation coming forth from the assessee as to what projects were envisaged to be undertaken which are now stated to be abandoned, what are the steps taken for undertaking these abandoned projects and status of the said projects which were envisaged to be implemented , their nexus of these projects with business of the assessee and reasons for their abandonment. There is no explanation/evidences forthcoming from the assessee on the same and only bald statements are made that the assessee does not envisage to undertake any further projects and hence it is decided to write off the entire capital work in progress which was existing upto ay: 2002-03 in the year under consideration viz. ay: 2003-04 as Revenue Expenses. Thus, no details at all were submitted before AO during assessment proceedings, learned CIT during revisionary proceedings u/s 263 and even before us. The assessee has relied upon certain judicial precedents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d decision taken by learned CIT u/s 263 of the 1961 Act, for the aforesaid reasons. We order accordingly. II) Claim of Write off of ₹ 202.42 lacs of DG Set:- We have observed that the assessee has claimed write off of written down value of crankshaft attached to DG Set after netting off with insurance claim , to the tune of ₹ 202.42 lacs as Revenue expenses while computing income of the assessee. The AO made enquiry with respect to the said write off and the assessee filed its reply stating that this claim is covered by provisions of Section 32(1)(iii) of the 1961 Act and hence allowable as deduction , vide letter dated 09.03.2006(page 57/pb) . The said reply of the assessee is reproduced by us at para 4.4.2 in the order. The AO simply accepted the contentions of the assessee without making any further enquiry and without looking into the fact whether the said asset was part of block of asset and applicability of Section 32(1)(ii) and 50 of the 1961 Act. The learned CIT invoked revisionary powers u/s 263 of the 1961 Act and directions were issued by learned CIT to AO to carry out fresh examination of the aforesaid claim preferred by assessee. It was observed by lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held to be erroneous so far as prejudicial to the interest of Revenue by learned CIT and directions were rightly issued by learned CIT to the AO to examine this issue , which decision of learned CIT, we uphold. We order accordingly. III & IV) Disallowance of Interest with respect to advances to Associated Concern - SPEL Semi Conductor Limited & Set off of interest received against interest expenses while making disallowance of Interest Expenses:- We have observed that the AO did not examine this issue of disallowance of proportionate interest with respect to the interest free advances made by assessee to the tune of ₹ 16.78 crores to SPEL Semi Conductor Limited . The AO did disallow proportionate interest with respect to interest free advances made by assessee to other associated/group companies but interest free advances made by assessee to this concern namely SPEL Semi Conductor Limited was not enquired/examined by AO while framing assessment and no disallowance was made by the AO. Thus, there was complete lack of enquiry by the AO with respect to these interest free advances made by assessee to its associated/group concern SPEL Semi conductor Limited. The assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/Mds/2011 vide common order dated 09.02.2017 at para 11 at page 18 wherein revisionary order of learned CIT passed u/s 263 of the 1961 Act was upheld by tribunal for ay: 2005-06 and 2006-07, by holding as under: "11. Before us, ld.A.R submitted that interest disallowance by the Ld. CIT was a subject matter of the appeal. In this connection, it is to be noted that the entire assessment order cannot be said to have merged with appellate order. In view of Explanation-C to Sec.263(1) of the Act whereas the assessee had preferred an appeal only on certain points; CIT can revise the assessment order on the other points. The reliance was placed on the judgements of jurisidictional High Court in the case of CIT Vs. Farida Prime Tannery in [2000] 244 ITR 465 (Mad) and in the case of Seshasayee Paper And Boards Limited in [1999] 238 ITR 683 (Mad) and in the case of Soft Beverages P. Ltd. in [2001] 249 ITR 552 (Mad). Hence, in our opinion, the concept of merger with the appellate order cannot be applied; therefore, Ld. CIT is well within his power in exercising revisional jurisdiction on this issue. This ground of assessee is rejected." With respect to the netting off of interest income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest can be made. The learned CIT directed AO to examine whether the ICDs have been placed by assessee out of internal accruals and whether any interest bearing borrowed funds were used for the purposes of making these interest free iCD's and in case interest bearing borrowed funds were used then directions were issued by learned CIT to follow decision of Hon'ble Supreme Court in the case of S.A.Builders(supra). We are of the considered view, that there was complete lack of enquiry by the AO as the AO did not raise any query regarding interest free ICD granted by assessee while on the other hand the assessee is incurring huge interest expenses on borrowings made by it, which is claimed as business deduction. We are not inclined to interfere with revisionary order passed by learned CIT. In any case, learned CIT has directed to examine the claim of the assessee that these ICD's were placed out of internal accrual and in case interest bearing borrowings were used, then principles of commercial expediency be applied as laid down by Hon'ble Supreme Court in the case of S.A.Builders(Supra) and then to allow or disallow the claim of the assessee. We uphold revisionary order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction of interest expenses while computing income for past several ay's. Now , interest relief and other concessions were granted by these lenders and it was incumbent on the AO to have looked into in details as to CDR package approved by the lenders and whether any income chargeable to income-tax with in contemplation of Section 41(1) or Section 28(iv) or any other applicable provisions of the 1961 Act is required to be brought to tax for any benefit, concession etc granted in interest relief or waiver of loan liability etc by these lenders . The decision of Hon'ble Madras High Court in the case of CIT v. Ramaniyam Homes Private Limited reported in (2016) 68 taxmann.com 289(Mad.) is relevant. In any case the learned CIT has directed AO to examine the issue again as there was no proper enquiry conducted by the AO which he ought to have conducted owing to interest relief and other relief's granted by lenders i.e. banks/FI's to the assessee under CDR package which was approved on 19.03.2003 and their taxability in the year under consideration . We are concerned with ay: 2003-04. The AO simply accepted the contentions of the assessee that the assessee has made claim of deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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