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TMI Blog2022 (1) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... Act r.w.s. 41 (1) is concerned, this issue has been decided by the Hon ble Supreme Court in the case of Mahindra Mahindra [ 2018 (5) TMI 358 - SUPREME COURT ] We decline to interfere with the findings of the CIT(A) in so far as this issue is concerned. - ITA No.3504/Del/2017 - - - Dated:- 13-1-2022 - Sh. N. K. Billaiya, Accountant Member And Sh. Amit Shukla, Judicial Member For the Appellant : Sh. Umesh Takyar, Sr. DR For the Respondent : Sh. Vinod Jain, CA ORDER PER N. K. BILLAIYA, AM: This appeal by the revenue is preferred against the order of the CIT(A), Hisar dated 31.03.2017 pertaining to A.Y.2011-12. 2. The grievance of the revenue read as under :- 1.1 On the facts circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judgments delivered by the Hon ble Bombay High Court in the case of Solid Containers ltd. Vs DCIT reported in 308 ITR 417 Mahindra Mahindra Ltd. Vs CIT reported in 261 ITR 501 and the Hon ble Delhi High Court in the case of Logitronics Pvt. Ltd. Vs CIT 333 ITR 386 Rollatainers Ltd. Vs CIT 339 ITR 54. Notwithstanding, if at a later stage assessee contests that funds were borrowed for purchase of capital assets, the same is also taxable u/s 28(iv) and reliance can be placed on the recent judgment delivered by Hon ble Madras High Court in the case of CIT Vs Ramaniyam Homes Pvt. Ltd. reported in 68 Taxmman 289 where it has been held that the waiver of loan for purchase of capital assets is taxable under section 28(iv) of the Income t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see and how much adjusted in the subsequent years have been furnished. The AO declined to accept the submissions of the assessee. 6. As regards remission of Principal of ₹ 2,51,07,081/- is concerned the AO was of the opinion that the said remission is arising as a result of remission of liability in respect of secured loans from SBI. The AO was of the opinion that since no details of total loan allowed, purpose of loan etc. have been filed. The AO again dismissed the claim of the assessee. The AO further observed that when the waiver took place the credits received by the assessee no longer represented liability but they become part of business income and, therefore, the sum of ₹ 2,51,07,081/- was taxable as income u/s. 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erusal of the balance sheet of the assessee show that the said amount represents loan from Heavy Financial Corporation and SBI. The said loan was taken for the purchase of fixed assets as per exhibit 117 and 118 of the paper book. Whether this waiver becomes part of taxable income u/s. 28 (iv) of the Act r.w.s. 41 (1) is concerned, this issue has been decided by the Hon ble Supreme Court in the case of Mahindra Mahindra 404 ITR 1. The relevant findings read as under :- 13. On a plain reading of Section 28 (iv) of the IT 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 provision of Section 28 (iv) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not; or 15. On a perusal of the said provision, it is evident that it is a sine qua non that there should be an allowance or deduction claimed by the assessee in any assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee. Then, subsequently, during any previous year, if the creditor remits or waives any such liability, then the assessee is liable to pay tax under Section 41 of the IT Act. The objective behind this Section is simple. It is made to ensure that the assessee does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t particularly deals with the remission of trading liability. Whereas in the instant case, waiver of loan amounts to cessation of liability other than trading liability. Hence, we find no force in the argument of the Revenue that the case of the Respondent would fall under Section 41 (1) of the IT Act. 17. To sum up, we are not inclined to interfere with the judgment and order passed by the High court in view of the following reasons: (a) Section 28(iv) of the IT Act does not apply on the present case since the receipts of ₹ 57,74,064/- are in the nature of cash or money. (b) Section 41(1) of the IT Act does not apply since waiver of loan does not amount to cessation of trading liability. It is a matter of recor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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