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2022 (7) TMI 890 - AT - Income TaxAddition for the Term Loan taken waiver of secured loan from ICICI Bank which was credited to the Capital Reserve Account - addition on account of Loan settlement with ICICI Bank by invoking the provisions under section 28(i) r.w.s. 2(24) and even rejected the assessee contention that loan are used for capital Goods and not for other business activity - HELD THAT:- It is pertinent to note that the assessee has used the loan amount for capital assets and this fact was never disputed by the Revenue. The waiver of principal amount of loan which was made by the Bank has been deducted by the assessee from the outstanding loan and credited to reserves & surplus. CIT(A) has relied upon the decision in the case of TV Sundaram Iyengar & Sons (1996 (9) TMI 1 - SUPREME COURT] and decision in case of Ramniyam Homes Pvt. Ltd.[2016 (4) TMI 954 - MADRAS HIGH COURT] It is seen that in case of TV Sundaram Iyengar (supra) money was received by the said assesse for carrying on trading activities. But in the present assessee’s case the loan was utilized only for the purpose of obtaining capital assets. Thus, the decision of the Hon’ble Apex Court in case of Mahindra & Mahindra (supra) is applicable in the present case as in the said case it was categorically held that when the assessee had not claimed deduction under Section 36(1)(iii) of the Act for interest on loan and loan was taken for acquiring capital asset then the waiver was on account of liability other than trading liability and thus provisions of Section 41(1) does not apply in such cases. Section 28(iv) will not be applicable in the present assessee’s case as the receipts are in the nature of cash or money. The waiver of loan amounts to cessation of liability other than trading liability, thus, the said amount cannot fall under Section 28(iv) will not be applicable. Therefore, the Assessing Officer as well as the CIT(A) was not right in making the said addition and confirming the same. Hence, appeal of the assessee is allowed.
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