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2021 (9) TMI 504 - AT - Income TaxAdditions u/s 28(iv) - Business perquisite - Waiver of ECB loan - Addition invoking the provisions of section 28(iv) OR Capital receipt - assessee has credited in its reserve account an amount which was waived on External Commercial Borrowings (ECB) loan account - HELD THAT:- Assessee has received ECB in convertible foreign exchange for acquiring assets in the earlier years. During the year under consideration due to heavy losses the ECB loan has been waived by the holding company and same has been credited to capital reserve. The facts remain undisputed by the appellantrevenue that the ECB loans were accepted to acquire capital assets. The waiver off loan having capital in nature cannot change its nature to revenue only because of such waiver by the holding company. As discussed above, the assessee has transferred the waiver of principal amount consisting of ECB directly to its capital. Hon’ble Supreme Court held in order to invoke the provisions u/s. 28(iv) of the Act, the benefit which is received has to be in some other form rather than in the shape of money. The very first condition of section 28(iv) of the Act is any benefit or perquisite arising from the business shall be in the form of benefit or perquisite other than in the shape of money and held an amount received as cash receipt due to the waiver of loan can be in no circumstances taxed under the provisions of section 28(iv) of the Act. ECB loan as received from the holding company by the assessee in convertible foreign exchange for the purpose of acquiring assets in the earlier years. The said loan has been waived and credited to the capital reserve to an extent of ₹ 25,19,15,516/-. Therefore, there is no benefit or perquisite other than in the shape of money to invoke the provisions of section 28 (iv) of the Act, thus, in our opinion, the ratio laid down by the Hon’ble High Court of Bombay in the case of Mahindra & Mahindra Ltd. [2003 (1) TMI 71 - BOMBAY HIGH COURT] which has been affirmed by the Hon’ble Supreme Court in the case of Mahindra and Mahindra Ltd. [2018 (5) TMI 358 - SUPREME COURT] is applicable to the facts and circumstances of the case and in view of the same, we do not find any reason to interfere with the order of CIT(A) and it is justified. Thus, the grounds raised by the appellant-revenue are dismissed.
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