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TMI Blog2020 (3) TMI 791X X X X Extracts X X X X X X X X Extracts X X X X ..... m the discussions and reasons aforementioned, we find sufficient force in the contention of the appellant. The substantial question of law therefore is answered in favour of the assessee by holding that waiver of loan cannot be brought to tax under Section 28(iv) of the Act. - INCOME TAX APPEAL (IT) NO.201 OF 2002 - - - Dated:- 5-3-2020 - UJJAL BHUYAN MILIND N. JADHAV, JJ. Mr. Subhash S. Shetty with Mr. P.C. Tripathi, Advocate for the Appellant. Mr. P.C. Chhotaray, Advocate for the Respondent. P.C.:- 1. Heard Mr.Subhash S. Shetty, learned counsel for the appellant; and Mr.P.C.Chhotaray, learned standing counsel revenue for the respondent. 2. This appeal under Section 260A of the Income Tax Act, 1961 (briefly the Act hereinafter) has been preferred by the assessee assailing the order dated 16th August, 2001 passed by the Income Tax Appellate Tribunal, A Bench, Mumbai (briefly the Tribunal hereinafter) in Income Tax Appeal No.144/Ban/91 for the assessment year 1984-85. 3. The appeal was admitted on the following substantial question of law:- Whether on the facts and in the circumstances of the case and in law, provisions of Section 28(iv) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The matter was carried forward in further appeal before the Tribunal by the revenue. Tribunal took the view that written off of the loan was inseparably connected with the business of the assessee and therefore this benefit had arisen out of the business of the assessee. Amount written off was nothing but an incentive for the business of the assessee. It was held that the benefit was received by the assessee in the form of writing off of the liability to the extent of the loan. Therefore, it could not be said that the assessee received cash benefit. By the order dated 16th August, 2001 Tribunal opined that Assessing Officer had correctly made the addition considering the waiver of loan as revenue receipt of the assessee and therefore, set aside the finding of the first appellate authority thereby restoring the order of the Assessing Officer. 9. Hence, the present appeal by the assessee under Section 260A of the Act. 10. Mr.Shetty, learned counsel for the appellant at theoutset has referred to the provisions contained in Section 28(iv) of the Act and contends that to be an income chargeable to income tax under the head profits and gains of business and profession , the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 211 ITR 919 also referred to by the Tribunal. Adverting to the decision of the Supreme Court in Mahindra Mahindra Limited (supra) he submits that facts of the present case are distinguishable from the facts of that case. Therefore, he prays for dismissal of the appeal. 12. Submissions made by learned counsel for the parties have been considered. 13. At the outset, we may refer to the provisions contained in Section 28(iv) of the Act. For ready reference, Section 28(iv) is extracted hereunder:- 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:- * * * * * * (iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession. 14. As would be evident from the above, Section 28 deals with profits and gains of business or profession. It says that the incomes mentioned therein shall be chargeable to income tax under the head profits and gains of business or profession . Clause (iv) refers to the value of any benefit or perquisite whether convertible into money or not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion as to whether waiver of loan by the creditor is taxable as perquisite under Section 28(iv) of the Act and in this connection referred to the provisions of Section 28(iv) of the Act. Thereafter Supreme Court held as under:- On a plain reading of section 28(iv) of the Income-tax Act, prima facie, it appears that for the applicability of the said provision, the income which can be taxed shall arise from the business or profession. Also, in order to invoke the provisions of section 28(iv) of the Income-Tax Act, the benefit which is received has to be in some other form rather than in the shape of money. In the present case, it is a matter of record that the amount of ₹ 57,74,064.00 is having received as cash receipt due to the waiver of loan. Therefore, the very first condition of section 28(iv) of the Income-Tax Act which says any benefit or perquisite arising from the business shall be in the form of benefit or perquisite other than in the shape of money, is not satisfied in the present case. Hence, in our view, in no circumstances, it can be said that the amount of ₹ 57,74,064.00 can be taxed under provisions of section 28(iv) of the Income-tax Act. 17. Fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the borrower s temporary use, especially a sum of money lent at interest; to lend, especially money. In Supreme Court on Words and Phrases, it is stated that loan necessarily supposes a return of the money loaned; in order to be a loan, the advance must be recoverable; loan is an advance in cash which includes any transaction which in substance amounts to such advance. Having noted the above, we may revert back to what the Supreme Court has said regarding loan in Mahindra Mahindra (supra). It is stated that loan generally refers to borrowing something, especially a sum of cash which is to be paid back alongwith interest decided by the parties. Therefore, the loanee or debtor is under a liability or obligation to pay back the loan amount i.e. the principal amount alongwith the interest agreed upon within a stipulated time frame. It is in this context that Supreme Court acknowledged the well settled principle that the creditor has the right to waive off the loan or the debt either partly or fully, thus absolving the debtor from the liability of repayment of loan. 21. In contra-distinction, subsidy has been explained in the Concise Oxford English Dictionary, Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X
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