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TMI Blog2021 (9) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... pted to acquire capital assets. The waiver off loan having capital in nature cannot change its nature to revenue only because of such waiver by the holding company. As discussed above, the assessee has transferred the waiver of principal amount consisting of ECB directly to its capital. Hon ble Supreme Court held in order to invoke the provisions u/s. 28(iv) of the Act, the benefit which is received has to be in some other form rather than in the shape of money. The very first condition of section 28(iv) of the Act is any benefit or perquisite arising from the business shall be in the form of benefit or perquisite other than in the shape of money and held an amount received as cash receipt due to the waiver of loan can be in no circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly issue emanates for our consideration is as to whether the CIT(A) justified in deleting the addition made invoking the provisions of section 28(iv) of the Act in the facts and circumstances of the case. 3. The facts of the case are that the assessee is a private limited company, engaged in the business of manufacturing of complete line of lead-acid batteries, serving domestic and export as well. The AO found that the assessee has credited in its reserve account an amount of ₹ 25,19,15,516/- which was waived on External Commercial Borrowings (ECB) loan account. The AO asked the assessee why the waived off ECB loan should not be taxed u/s. 28(iv) of the Act. It was submitted as per the account standard the waiver off loan shall no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) held that the decision of Hon ble High Court of Bomay will have a binding effect and following the same deleted the addition made by the AO. 5. The ld. AR, Shri Hariom Tulsyan submits that the assessee is a subsidiary of NS India Holding AB having 51% shares in the assessee company. The assessee borrowed USD 30 lacs from the holding company, in the form of External Commercial Borrowings (ECBs) for the purpose of capital expenditure during F.Y. 2009-10 (A.Y. 2010-11) and further borrowed USD 17 lacs from the holding company during F.Y. 2011-12 (A.Y. 2012-13). The said borrowings were fully utilized for the capital expenditure. Further, he submits that the assessee was running into losses and during the year under consideration that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing company and same has been credited to capital reserve. The facts remain undisputed by the appellantrevenue that the ECB loans were accepted to acquire capital assets. The waiver off loan having capital in nature cannot change its nature to revenue only because of such waiver by the holding company. As discussed above, the assessee has transferred the waiver of principal amount consisting of ECB directly to its capital reserve. We note that at the time of assessment there were two decisions, one by Hon ble Jurisdictional High Court of Bombay and another by Hon ble High Court of Madras but however the AO preferred to place reliance of the Hon ble High Court of Madras in the case of Ramaniyam Homes (P) Ltd. (supra) and held the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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