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2017 (11) TMI 1052 - ITAT CHENNAIAssessment of waiver of principle amount of loans - assessee's claim that the waiver of loan cannot be construed to be income under Section 28(iv) and it is also not an income under Section 41(1) - Held that:- As gone through the judgment of Madras High Court in Iskraemeco Regent Ltd. (2010 (11) TMI 43 - Madras High Court) found that the loan was borrowed for purchase of a capital asset, hence, the waiver of loan is not an income assessable to tax. The High Court further found that it cannot be treated as income either under Section 28(iv) of the Act or under Section 41(1) of the Act. The High Court further found that since the loan borrowed was used for purchase of capital asset, it is a capital receipt. Thus this Tribunal is of the considered opinion that the loan amount waived by ICICI Bank has to be necessarily considered as revenue receipt, hence, it is taxable. Therefore, this Tribunal do not find any reason to interfere with the orders of the lower authority and accordingly the same are confirmed. Allowance of pre-operative expenses - Held that:- CIT(Appeals) found that the assessee showed the pre-operative expenses to the extent of ₹ 2,36,27,733/- in the balance sheet as on 31.03.2003. However, what was written off is only ₹ 1,81,54,653/- as per the Profit & Loss account for the financial year 2003-04. The CIT(Appeals) further found that the commercial business operation was not commenced. The CIT(Appeals) has found that the business operation of the assessee was suspended since September, 1999 and no activity was undertaken thereafter. There is no material available on record to suggest that the assessee has commenced the business operation. Hence, the business operation was not commenced and hence, the expenditure like interest, losses due to exchange rate fluctuation cannot be allowed. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly confirmed the order of the Assessing Officer.
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