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TMI Blog2022 (11) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered by Hon'ble Supreme Court in the case of Mahindra Mahindra Ltd. (supra) will not apply. We notice that the decision has been rendered by Hon'ble Supreme Court in the case of T.V. Sundaram Iyengar Sons Ltd. (supra) on a different set of facts, i.e. in the case before Hon ble Supreme Court, the assessee had received deposits from its customers (Debtors) in the course of carrying on of its business and the said deposits was written off in the books of account on the reasoning that there was no claim from debtors. Since the deposits were received during the course of carrying on regular trading activities, the Hon ble Supreme court held that the write off amount available in the said debtors account is assessable as income. In the instant case, the assessee has received loan from certain parties for the purpose of using it in the business of lending of money. The lenders are not the customers of the assessee. There should not be any dispute that the loan transaction is a capital account trasaction. Hence waiver of loan cannot take the colour of trading transactions as per the decision rendered in the case of Mahindra Mahindra Ltd (supra). Accordingly in our view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the assessee is of financing and brokerage. 4. The first issue relates to deletion of addition of Rs. 2,15,21,467/- made by the Assessing Officer under section 28(iv) of the I.T. Act. 5. The facts relating to the issue are that the Assessing Officer noticed that the assessee has written back certain loans received by it to the tune of Rs. 265 lakhs and credited the same directly to the capital reserve account i.e. the above said amount was not routed through the profit and loss account. The assessee explained that it had received loan of Rs. 22.50 crores from M/s. Uttam Galva Metallics Ltd. on 27.6.2014 relevant to A.Y. 2015-16. During the year under consideration it was agreed that the above said loan was to be assigned to Mr. Sunil Dalal for a sum of Rs. 20 crores and the remaining amount of Rs.2.50 crores was waived of. Accordingly, the assessee transferred the above said amount Rs. 2.50 crores to the Capital Reserve account, since it was a capital receipt. The assessee had also taken loan of Rs. 15 lakhs from M/s. V. Raheja Design Construction Pvt. Ltd. on 8.10.2014 relevant to A.Y. 2015-16. During the year under consideration it was agreed by the parties that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to the amount of Rs. 2,15,21,467/- assessed under section 28(iv) of the Act, learned CIT(A) deleted the addition following the decision rendered by Hon'ble Supreme Court in the case of Mahindra Mahindra Ltd. (261 ITR 501), wherein it was held that the provisions of section 28(iv) shall apply only in respect of benefit or perquisite received in kind. It was further held by Hon'ble Supreme Court that waiver of loan is in respect of money transaction and therefore would not be in nature of any benefit or perquisite as construed in section 28(iv) of the Act. Accordingly learned CIT(A) deleted the addition of Rs.21,15,21,467/-. The Revenue is aggrieved on the decision so rendered by learned CIT(A). 10. We have heard the parties on this issue and perused the record. It is pertinent to note that the amount that should have been considered u/s 28(iv) by the AO is Rs.2.65 crores, which represented principal portion of loan waived of by the lenders. The assessment of interest u/s 41(1) is nothing to do with the above said amount. We are making this observation only for the purpose of clarification. 11. We noticed that learned CIT(A) has deleted the addition made u/s 28(i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y transaction and, therefore, would not be in nature of any benefit or perquisite as construed in section 28(M) of the Act. b) The decision of Bombay High Court in Mahindra and Mahindra, supra, has been affirmed by the Hon'ble Supreme Court in CIT v Mahindra and Mahindra Ltd. (2018) 404 ITR 1 (SC) wherein the relevant extract of the decision is reproduced as hereunder 13) On a plain reading of Section 28 (iv) of the IT Act, prima facie, a 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 IT 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 Rs.57,74,064/- is having received as cash receipt due to the waiver of loan. Therefore, the very first condition of Section 28 (iv) of the IT 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 sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account liability cannot be treated as on revenue account and cannot be brought to tax, as only the receipts on revenue account would partake the character of income. The issue raised in this appeal has been thus made clear by the Hon'ble High Court of Bombay in the case of Mahindra Mahindra Ltd. (supra). d) ITO VS M/s Sri Vasavi Polymers P. Ltd. (ITA no. 606/VIZ/2018) Vishakapatnam ITAT - wherein the Revenue had relied on the decisions of Solid Containers Ltd vs DCIT, Spl Range-1 Mumbai [2009] 178 taxman 192 (Bombay) and TV Sunderam lyengar Sons Ltd [1996] 222 ITR 324 (SC). The Hon'ble ITAT Vishakhapatnam rejecting the contention of the Revenue has held that ......... 5. During the appeal hearing, the Ld DR submitted that the amount of Rs. 1,70,00,000/- represent waiver of working capital loan which was used for day to day running of the business, therefore, submitted that the same required to be brought to tax u/s 28(1) of the Act The Ld DR relied on the following decisions (a) Hon'ble High Court of Bombay in the case of Solid Containers Ltd. Vs Dy Commissioner of Income Tax (b) Hon'ble High Court of Delhi in the case of Rollatainers Ltd Vs. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant, it is undisputed fact that the waiver is of unsecured loan and d loan is not receipt in kind and thus, sec.28(iv) of the Act does not get attracted. In view of the above, the addition of Rs. 2,15,21,467/- made u/s 28(iv) of the Act is hereby deleted. 12. We notice that the Ld CIT(A) has followed the decision rendered by Hon ble Supreme Court in the case of Mahindra Mahindra (supra) in arriving at the conclusion that the provisions of sec.28(iv) will not aply to waiver of loan. The Learned AR also placed reliance on the decision rendered by the Coordinate Bench in the case of ACIT Vs. Sunil B. Dalal (ITA No. 2239/Mum/2021 dated 12.7.2022), wherein the Tribunal has held that the provisions of section 28(iv) of the Act will not apply to waiver of loan and in this regard the Tribunal has also taken support of the decision rendered by Hon'ble Supreme Court in the case of Mahindra Mahindra Ltd. (supra). 13. We notice that, in the grounds of appeal, the Revenue has taken support of the decision rendered by Hon'ble Supreme Court in the case of T.V.Sundaram Iyengar Sons Ltd. (supra) in order to contend that the loan taken by the assessee was for the purpose o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angle, then the natural justice would warrant that he should put the same before the assessee seeking his explanations. Nothing of that sort has happened. In our view, it is the prerogative of appellate authority to examine the issue from different angle after affording adequate opportunity to the assessee. Before us, no authority was cited that the AO in support his ground that the Ld CIT(A) ought to have examined the issue from different angle. Accordingly, we do not find any merit in the alternative ground raised by the AO. 16. Be that as it may, we notice that the provisions of section 56(2)(x) of the Act are attracted when any person receives any sum of money without consideration from any other person during a particular year. The contention of learned AR is that the assessee had received the loan in 2014 relevant to A.Y. 2015-16 and it has not received any money during the year under consideration i.e. A.Y. 2018-19. The Ld A.R submitted that, by applying strict rule of construction, provisions of section 56(2)(x) cannot invoked in AY 2018-19, when the assessee has not received any sum of money during that year. He further submitted that the assessee has only got waiver ..... X X X X Extracts X X X X X X X X Extracts X X X X
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