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TMI Blog2021 (3) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the decision of this tribunal in favour of the assessee. However, the breakup of loans, i.e., the principal component and interest component was not given by the bankers. We have gone through the settlement letters of banks dated 16/03/2015 of State Bank of India wherein the bank had informed the assessee that the sum of ₹ 40.00 crores were settled for outstanding loans of ₹ 57.39 crores which includes the interest up to 28/02/2015. Similar letters were also given by other consortium banks, thus, there was no bifurcation of principal and interest component in the sanction of banks. In our considered view, the interest debited to the Profit Loss account from the date of loan till the date of waiver of the loan requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad in Appeal No.32/2018-19/Cir.4(1), VSKP/CIT(A)-2, VSKP/18- 19 dated 20.02.2019 for the Assessment Year (A.Y.) 2015-16. Cross objections are also filed by the assessee supporting the order of the Ld.CIT(A). 2. Brief facts of the case are that the assessee is a company engaged in the business of manufacturing of cylinders, availed loans from a consortium of three banks, viz, State Bank of India, State Bank of Hyderabad and Punjab National Bank in F.Y.2006-07 for its business activities. The company stated to be ran into losses and entered into one Time Settlement with the consortium of banks for settlement of outstanding loans and accordingly received the waiver of loan amount of ₹ 32,88,97,775/- which is claimed to be consisting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for information from the banks u/s 133(6) of the Income Tax Act, 1961 (in short Act ) and found that the entire loan taken by the assessee was for the purpose of working capital and viewed that both the principal and interest constitute income. Accordingly, the AO placing reliance on the decision of T.V.Sundaram Iyengar and Sons Ltd. (1996) 222 ITR 344 (SC) and Rollatainers Ltd. Vs. CIT, Delhi High Court and the decision of Hon ble Madras High Court in the case of M/s Ramaniyam Homes Pvt. Ltd. (Order No.278 of 2014 dated 22.04.2016) held that the entire amount i.e. interest as well as principal waived by the banks as a result of One Time Settlement is liable to tax u/s 41(1) of the Act, accordingly, made the addition of ₹ 31,07,14, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition was deleted, thus allowed the appeal partly. 4. Against the order of the Ld.CIT(A), the assessee filed appeal, challenging the sustaining of addition of ₹ 9,03,67,825/- representing the working capital loan and the department preferred appeal against the deletion of addition of ₹ 22,03,47,150/- representing the term loan. The assessee also filed cross objections supporting the order of the CIT(A) with regard to deletion of term loan of ₹ 22,03,47,150/-. During the appeal hearing, the Ld.AR argued that the assessee has debited the interest to the Profit Loss account and rightly offered the waiver of interest component as income and taken the principal amount directly to the balance sheet as capital reserve. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase is squarely covered by the decision of this tribunal in favour of the assessee. 6.1. However, the breakup of loans, i.e., the principal component and interest component was not given by the bankers. We have gone through the settlement letters of banks dated 16/03/2015 of State Bank of India wherein the bank had informed the assessee that the sum of ₹ 40.00 crores were settled for outstanding loans of ₹ 57.39 crores which includes the interest up to 28/02/2015. Similar letters were also given by other consortium banks, thus, there was no bifurcation of principal and interest component in the sanction of banks. Against the outstanding loan of ₹ 71,07,14,973/-including up-to-date interest, compromise was reached for on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018 dated 05.06.2020, waiver of interest needs to be verified. 6.3. The assessee has furnished the interest amount at ₹ 1,81,82,800/- and the principal amount at ₹ 31,07,14,975/-. As observed from the financial statement, the outstanding loan amount was ₹ 71.07crores inclusive of finance cost of ₹ 39.21 lakhs for the A.Y.2015-16 and ₹ 7.52 crores for the A.Y.2014-15. The details of interest debited to the P L account on various years was not furnished by the assessee and hence, the bifurcation given by the assessee in respect of the principal and the interest amount appears to be incorrect. Therefore, the correctness of interest component as well as the principal component, required to be verified. In our co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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