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2021 (3) TMI 590 - AT - Income TaxAddition u/s 41(1) - cessation of liability - waive of loan as part of one time settlement of loan with the banks - The assessee filed explanation objecting for treating the principal amount as income, since, it was not claimed as expenditure in the earlier years, therefore, submitted that the cessation of liability towards principal amount is not to be treated as income. - HELD THAT:- The issue with regard to taxing of principal amount as income was decided by this Tribunal the case of Vasavi Polymers (P) Ltd [2020 (6) TMI 401 - ITAT VISAKHAPATNAM] and the case is squarely covered by the decision of this tribunal in favour of the assessee. However, the breakup of loans, i.e., the principal component and interest component was not given by the bankers. We have gone through the settlement letters of banks dated 16/03/2015 of State Bank of India wherein the bank had informed the assessee that the sum of ₹ 40.00 crores were settled for outstanding loans of ₹ 57.39 crores which includes the interest up to 28/02/2015. Similar letters were also given by other consortium banks, thus, there was no bifurcation of principal and interest component in the sanction of banks. In our considered view, the interest debited to the Profit & Loss account from the date of loan till the date of waiver of the loan required to be brought to tax u/s 41(1) of the Act subject to the maximum waiver of the loan amount and the balance to treated as the principal. The benefit gained by the assessee on account of waiver represent the interest debited to Profit and Loss account from the date of availing the loan in various assessment years till the date of redemption which was claimed by the assessee as deduction and the same required to be taxed u/s 41(1) of the Act. Thus the interest charged to the Profit and loss account on the term loans as well as working capital loans are the profits chargeable to tax u/s 41(1) of the act. Though this case is covered by the decision of this Tribunal in favour of the assessee in respect of waiver of principal amount of term loan as well as working capital loan in the case of Sri Vasavi Polymers Private Limited [2020 (6) TMI 401 - ITAT VISAKHAPATNAM], waiver of interest needs to be verified. Matter remanded back.
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