TMI Blog2014 (2) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... 43B - Held that:- No break-up of the waiver had been provided by IDBI - If the entire outstanding having been considered as a single outstanding sum, the various components thereof, and resultantly of the amount paid, would need to be ascertained on some reasonable basis - If no deduction on account of interest has been claimed or allowed, no income on its write back in accounts on waiver shall arise - The issue has been restored for fresh adjudication. Loss on fire - Capital or revenue - Held that:- The loss apart from that in respect of stock-in-trade, is in respect of capital assets destroyed in fire - The loss of capital asset would be a capital expenditure by definition - The assessee has incurred expenditure in restoring the asset/s destroyed to its normative working condition, the said expenditure, as reduced by the insurance claim received/receivable in its respect, would be a revenue expenditure arising in the normal course of business - The issue has been restored for fresh adjudication. - I.T.A. No. 665/Mum/2012 - - - Dated:- 5-2-2014 - Shri Sanjay Arora, AM And Shri Vijay Pal Rao, JM,JJ. For the Appellant : Shri R. S. Sanghai For the Respondent : Shri Gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ising on the waiver of the loan is independent of the manner of the utilization thereof. In fact, the apex court has time and again, i.e., in the context of the fact situation of the various cases, as in the case of CIT vs. Tata Iron Steel Co. Ltd. [1998] 231 ITR 285 (SC), sought to clarify that the cost of an asset is independent of the loan obtained to acquire it, so that it would not in any manner alter with the manner and mode of repayment of the loan, or its non-repayment. That is, the raising of capital - borrowed or otherwise, is a matter distinct and separate from its application, so that the waiver of a loan should bear the same character irrespective of the asset wherein the same stands deployed. So however, the hon'ble jurisdictional high court has time and again unequivocally held that while the waiver of a term loan, applied in capital assets - depreciable or otherwise, would be a capital receipt and, thus, not income by definition, that of a working capital loan, utilized for working capital purposes, i.e., for running the business, would bear a different character, i.e., of a trade receipt, and is therefore assessable as business income u/s.28. This view stands aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds, besides being fungible, are in a state of dynamic flux in an entity as a commercial entity. As such, even as the assessee may have had adequate funds for investment in shares in the year of their acquisition (which though would need to be exhibited), depletion of capital over time, as on account of continuing losses, may result it in being financed wholly or partly in time by borrowed capital. The onus to establish its claim is on the assessee, failing which rule 8D would apply. The matter is, accordingly, restored back to the file of the A.O., who shall also address the assessee's grievance qua the mistake claimed to have inflicted his working. We decide accordingly. 6. The assessee's third ground in fact represents its alternate claim for allowing deduction u/s.43B on payment of interest to IDBI, at Rs.834.19 lacs. The entire waiver of Rs.2804.95 lacs out of the outstanding demand of Rs.4466.07 lacs being considered as towards principal, the assessee contends in the alternative that to the extent of payment, interest on term loans may be allowed to it inasmuch as no deduction in its respect stood claimed or allowed, being unpaid, in view of section 43B(e). 7. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by the first appellate authority in the absence of the adequate details. On merits, we firstly observe that the total amount under reference is at Rs.2,17,32,987/-, i.e., including both the loss on fire as well as the loss on sale of structure. The two would, therefore, need to be considered separately, which has not been, both for want of details as well as due application. In fact, the total loss claimed is at Rs.2.67 crores (para 5.1 of the assessment order), so that the nature and the quantum of the amount already allowed is also not clear. 9.2 Further, the assessee has since received an insurance claim at Rs.99,53,155/-, so that the loss arising to the assessee on fire would stand reduced to that extent. The assessee is following accrual method of accounting, which is even otherwise mandatory on it, so that the amount/s as claimed or anticipated to be realized against insurance contract/s ought to have been factored by it in accounts, and only the balance amount/s claimed as it's share of the loss sustained. Further, the fact that the same (insurance claim) stands offered as income for the subsequent year (A.Y. 2009-10), as stated before us, is to no moment inasmuch as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paratus, or, as the case may be, an impairment or depletion therein. To the extent there is no such increase or decrease, there can be no addition or reduction in the value of the relevant block of assets. Rather, the WDV, being statutorily defined, reduction therein could only be on account of moneys payable. 9.4 The loss on the sale of structure, as it would appear to us, is on a different footing, so that where and to the extent in relation to a capital asset, forming part of the firm's capital structure, would be on capital account, even as stated by the authorities below. 9.5 The matter, in view of the foregoing, is largely indeterminate. Accordingly, we only consider it fit and proper that the matter is restored for afresh adjudication to the file of the A.O. per a speaking order after allowing the assessee a reasonable opportunity to state its case. The A.O. shall, in doing so, have regard to our foregoing observations. 10. The fifth and the last ground of the appeal relates to the assessment of interest received at Rs.1,48,318/- as income from other sources, as against business income returned by the assessee. The same was not accepted by the Revenue following the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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