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2016 (6) TMI 1161 - AT - Income TaxAllowance of principal amount of the loan waiver - tax u/s. 28(iv) - interest waiver u/s 41 - Held that:- The decision by the tribunal for A.Y. 2007-08, insofar as it allows relief to the assessee, is based on the waiver of a term loan (from ICICI Bank) for the purchase of machinery. The same stands on a different footing, and is covered in the assessee’s favour by the decision in Mahindra & Mahindra Ltd. vs. CIT [2003 (1) TMI 71 - BOMBAY High Court] even otherwise binding on this tribunal. In fact, the tribunal has clearly held that the loan of ADCB, being toward stock-in-trade, the benefit arising on it’s waiver is taxable. There is no finding at any stage of the proceedings as to the profile of the loan/s waived, and the manner of its’ utilization, i.e., whether for capital asset/s or for working capital of the business, i.e., toward financing the same. The matter is accordingly restored back to the file of the A.O. to verify and examine the assessee’s claim/s as being either an advance for and utilized for the acquisition of capital assets and/or toward working capital or regular business purposes, so that it would stand to be assessed only in case of, and to the extent of the latter. No doubt, the Hon’ble High Court in CIT vs. Ramaniyam Homes (P.) Ltd. [2016 (4) TMI 954 - MADRAS HIGH COURT] has held that a loan/advance, even if for a capital asset, would on its’ waiver yield a benefit arising in the course of business, assessable u/s. 28(iv), the decision in Mahindra & Mahindra Ltd. (supra), being by the Hon'ble jurisdictional High Court, shall prevail. The A.O. shall, upon issuing his findings, decide the matter in terms of the decision by the Hon'ble jurisdictional High Court in Solid Containers Ltd. (2008 (8) TMI 156 - BOMBAY HIGH COURT ) and/or, as the case may be, Mahindra & Mahindra Ltd. (supra). Revenue’s appeal is allowed for statistical purposes.
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