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TMI Blog2023 (9) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... not satisfy the test to make it taxable within the terms of section 28(iv). Clearly, the purpose of loan was neither dealt with nor would be a relevant determinative factor. The only test is that the 'benefit' or 'perquisite' should be other than in the shape of money . Thus, in the present case, the nature of loan would be of no relevance and accordingly, the exercise of ascertaining the purpose of loan as contended by the Revenue does not arise. The judgment of Apex Court in Mahindra and Mahindra (supra) holds the field. The benefit of waiver of loan in the present case is also not other than in the shape of money . Accordingly, the 'benefit' would fall outside the ambit of Section 28(iv) of I.T. Act. The recent amendment to Section 28 of I.T. Act vide Finance Bill 2023 Finance Bill 2023 - 11. In section 28 of the Income-tax Act, for clause (iv), the following clause shall be substituted with effect from the 1st day of April, 2024, namely: (iv) the value of any benefit or perquisite arising from business or the exercise of a profession, whether (a) convertible into money or not; or (b) in cash or in kind or partly in cash and partly in kind; wherein the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.02.2018 The Commissioner of Income Tax (Appeals) dismissed the above said appeal (Annexure-B). 27.12.2021 The ITAT B Bench, Bangalore, disposed off the appeal filed by the Revenue against the order dated 31.10.2019 of the Commissioner of Income Tax (Appeals) for AY 2005-06, by holding that the principal portion of the loan which was received by the assessee is not in the course of trading activity and hence not taxable and remitted the matter to the assessing officer to verify if there was any deduction with respect to waiver of interest in any earlier assessment year and then only the such waiver of interest could be taxable. (Annexure-C). 21.01.2022 The ITAT C Bench, Bangalore partly allowed the appeal preferred by the Petitioner against the order of Commissioner of Income Tax (Appeals), Bengaluru dated 28.02.2018 for AY 2006-07. The ITAT concluded that the loan received by the assessee was in the course of carrying on business of the assessee and the waiver of the loan amount will result in revenue receipt and shall be liable to tax. (Annexure-D). 25.05.2022 The petitioner flied Miscellaneous Application u/s 254(2) for AY 2006-07 before the ITAT C Bench, Bengaluru in ITA.No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed while holding that waiver of term loan was taxable. 9. It is this order that is challenged in the present Writ Petition not being satisfied with the partial allowing of Miscellaneous Petition. 10. Sri E.I.Sanmathi, learned counsel appearing for the Revenue has objected to the maintainability of the Writ Petition contending that the effect of rectification of the order would result in a fresh original order as against which there is a remedy available under Section 260A of the I.T. Act to the High Court against the order passed by the Appellate Tribunal. It is also submitted that the order passed under Section 254(2) of the I.T. Act as well would be an appealable order in terms of Section 260A of the I.T. Act 11. After hearing both sides, the following points would arise for consideration:- (A) Whether as against the order passed in Miscellaneous Petition under Section 254(2) of I.T. Act in light of the remedy of appeal being available under Section 260A of I.T. Act, the Writ Petition could be entertained? (B) Whether the law laid down in Mahindra and Mahindra (supra) if taken note of, would result in benefit in the form of waiver of loan being construed as monetary benefit and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned as the petitioners had an alternative, effective and efficacious remedy provided under the statue, however, such conclusion cannot be elevated to a rule prescribing non-entertaining of Writ Petitions where alternative remedy is available. In the order rendered by the learned Single Judge it is observed as follows:- 10. The bar relating to alternative remedy has been a rule of self-imposed limitation rather than a rule of law. The existence of alternative remedy had always been regarded as one of the factors which this court is required to bear in mind while exercising its discretionary jurisdiction. Ordinarily, the court will not entertain a petition for a writ under article 226 of the Constitution, where the petitioner has an alternative remedy, which without being unduly onerous provides an equally efficacious remedy. The law on this point is now well settled The learned Single Judge further refers to the observation made by the Apex Court in Thansingh Nathmal v. Superintendent of Taxes [1964] 15 STC 468, 474 : AIR 1964 SC 1419 , [Thansingh Nathmal] at para-7 which reads as follows:- 7. Against the order of the Commissioner an order for reference could have been claimed if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Apex Court in Thansingh Nathmal (supra) which speaks for itself and lays down the proposition that the exercise of jurisdiction of the High Court under Article 226 of the Constitution of India is couched in wide terms and that exercise of jurisdiction is discretionary and subject to self imposed limitations and that where there is redress provided for under a statute, the High Court normally will not permit by entertaining a petition under Article 226 of the Constitution, accordingly, the order of the learned Single Judge cannot be construed as laying down an inflexible rule of non-entertaining of Writ Petition when alternative remedy is available by relying on the conclusion of that case. The appeal against the order of learned Single Judge L. Sohanraj Ors. v. Deputy Commissioner of Income Tax and Another (supra) came to be rejected by the Division Bench in L. Sohanraj (supra), which merely affirmed the order of learned Single Judge without adding anything further than what was laid down by the learned Single Judge. 16. In H.V. Shantaram (supra), the Court had framed a question - (ii) Whether this is a fit case for this Court to examine the correctness of the impugned orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sri Acharya that the respondent also would not raise any objection with regard to the maintainability of the appeal under 260A of the Act is placed on record. Finally, the Court has concluded by rejecting the petition filed under Article 226 and 227 of the Constitution of India while reserving liberty to challenge the impugned order by way of an appeal under Section 260A of the I.T. Act. The conclusion also cannot be relied upon as laying down the rule of non-maintainability of Writ Petition where an alternative remedy of appeal is provided under a statute. The observations reproduced above would clearly indicate that the entertaining of Writ Petition is a matter of discretion and appropriateness. 17. Accordingly, the judgments of this Court relied upon and referred to above would reiterate that entertaining of a Writ Petition in the presence of a statutory alternative remedy is a matter of appropriateness indicating existence of discretion in the Court while recognizing the exceptions for entertaining such Writ Petitions even where an alternative remedy exists. The conclusions in the above judgments do not lay down any principle of law and are mere decisions in the facts of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law; (v) When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion; and (vi) In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with. (emphasis supplied) 27. The above principle was reiterated by a three-judge Bench of this Court in Executive Engineer v. Seetaram Rice Mill. In that case, a show cause notice/provisional assessment order was issued to the assessee on the ground of an unauthorized use of electricity under Section 126(1) of the Electricity Act 2003 and a demand for payment of el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation officer Civil Appeal No.5393/2010 dated 01.02.2023 , apart from reiterating the exceptions for entertaining Writ Petitions despite availability of alterative remedy, has observed as follows:- 4. In a long line of decisions, this Court has made it clear that availability of an alternative remedy does not operate as an absolute bar to the maintainability of a writ petition and that the rule, which requires a party to pursue the alternative remedy provided by a statute, is a rule of policy, convenience and discretion rather than a rule of law. Though elementary, it needs to be restated that entertainability and maintainability of a writ petition are distinct concepts. The fine but real distinction between the two ought not to be lost sight of. The objection as to maintainability goes to the root of the matter and if such objection were found to be of substance, the courts would be rendered incapable of even receiving the lis for adjudication. On the other hand, the question of entertainability is entirely within the realm of discretion of the high courts, writ remedy being discretionary. A writ petition despite being maintainable may not be entertained by a high court for very m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose would be served in relegating the parties to avail the statutory remedy. That apart, as noticed in the principle at points (a) and (b) above, the entertaining of Writ Petition involves discretion of the Court and there being no inflexible rule acting as a bar to entertaining of Writ Petition even where alternative remedy is available. 22. Accordingly, the contention regarding maintainability of the Writ Petition is rejected while clarifying that the judgments of this Court in L. Sohanraj (supra) and H.V. Shantaram (supra) do not create a bar on maintainability of Writ Petition as contended and the later judgments of the Apex Court in Magadh Sugar and Energy Ltd (supra) and M/s.Godrej Sara Lee (supra) further explain and reiterate that existence of an alternative remedy does not raise a bar on maintainability and only call upon the Court to decide on entertainability which involves exercise of judicial discretion. (B) Whether the law laid down in Mahindra and Mahindra (supra) if taken note of, would result in benefit in the form of waiver of loan being construed as monetary benefit and not covered by Section 28(iv) of the I.T. Act? 23. At the outset, it must be noted that the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... needs to be kept in mind. 28. The assessee on the other hand has relied on the judgment in Mahindra and Mahindra (supra) where the Apex Court had declared that the benefit to be taxable for the purpose of Section 28(iv) of the I.T. Act, should be a benefit/ perquisite other than in the shape of money. The Apex Court held that the benefit upon waiver of loan was in the nature of cash receipt and accordingly, the benefit not being other than in the shape of money would fall outside the ambit of Section 28(iv) of I.T. Act and hence, would not constitute income that could be taxable. 29. It must be noted that the Apex Court in Mahindra and Mahindra (supra) was dealing with the waiver of loan and the relevant reasoning as regards Section 28(iv) of the I.T. Act is found in para Nos.13 to 16, which are as follows:- 13. The term loan generally refers to borrowing something, especially a sum of cash that is to be paid back along with the interest decided mutually by the parties. In other terms, the debtor is under a liability to pay back the principal amount along with the agreed rate of interest within a stipulated time. 14. It is a well-settled principle that creditor or his successor may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther than in the shape of money , while holding that the benefit upon loan waiver was in the form of a cash receipt and did not satisfy the test to make it taxable within the terms of section 28(iv). Clearly, the purpose of loan was neither dealt with nor would be a relevant determinative factor. The only test is that the 'benefit' or 'perquisite' should be other than in the shape of money . 31. Thus, in the present case, the nature of loan would be of no relevance and accordingly, the exercise of ascertaining the purpose of loan as contended by the Revenue does not arise. 32. The judgment of Apex Court in Mahindra and Mahindra (supra) holds the field. The benefit of waiver of loan in the present case is also not other than in the shape of money . Accordingly, the 'benefit' would fall outside the ambit of Section 28(iv) of I.T. Act. 33. The recent amendment to Section 28 of I.T. Act vide Finance Bill 2023 Finance Bill 2023 - 11. In section 28 of the Income-tax Act, for clause (iv), the following clause shall be substituted with effect from the 1st day of April, 2024, namely: (iv) the value of any benefit or perquisite arising from business or the exercise of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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