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2015 (8) TMI 1150 - ITAT HYDERABAD

2015 (8) TMI 1150 - ITAT HYDERABAD - TMI - Waiver of principal loan amount claimed as capital receipt in the revised computation of income - CIT(A) directed the AO to compute the correct figure of brought forward losses and give credit to the assessee wherever the law so demands - Held that:- Assessee has filed the revised computation of income and has failed to file the revised return. The AO has also given assessee enough time by taking up the scrutiny proceedings and issued notice u/s 143(2) .....

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e fact is that the assessee has not filed revised return and hence the ratio of the decision in the case of Goetz India Ltd vs. CIT (Supra) is applicable. In fact the proceedings are u/s 147, which are for assessing undisclosed income. Further, the Apex Court in the case of CIT vs. Sun Engineering Works (P) Ltd (S.C) (1992 (9) TMI 1 - SUPREME Court ) wherein held where the claims of the assessee durng the course of re-assessment proceedings relating to the escaped income are accepted, still the .....

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mputation of income stating that the brought forward losses as per books of accounts has not been calculated correctly for the purpose of section 115JB. The brought forward business loss reduced from the book profit were stated to be ₹ 20,99,67,903 as against ₹ 14,86,71,093 claimed in the return of income. AO rejected this claim of carry forward loss in the books of accounts on the ground that it was not claimed in the return of income. The CIT (A) directed the AO to compute the corr .....

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which has been waived and to rework the depreciation as directed by CIT(A) - Held that:- The entire cost of machinery has been paid by the assessee to the suppliers. Therefore, there is no question of reduction in the cost of acquisition of assets on which depreciation has been granted. The issue is with regard to the treatment of waiver of the principle portion of the loan. The waiver of loan does not reduce the cost of acquisition of the plant and machinery. The waiver is for reduction on the .....

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t. - Decided in favour of assessee. - ITA No. 235/Hyd/2013,C.O. No.18/Hyd/2013 - Dated:- 29-7-2015 - Shri B. Ramakotaiah & Smt.Asha Vijayaraghavan, JJ. For the Petitioner : Shri B.V. Gopinath, DR For the Respondent : Shri P. Murali Krishna ORDER Per Smt. Asha Vijayaraghavan, J.M. These are the cross appeals preferred by the Revenue and the assessee against the order of the CIT (A)-III Hyderabad dated 24th December, 2012 relating to A.Y 2008-09. 2. The assessee is a company engaged in the bus .....

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ed a letter stating that the return originally filed be treated as being filed in response to the notice issued u/s 148. However, during the course of assessment proceedings, assessee observed that while filing the original return of income, principal waiver amounting to ₹ 9,26,00,305 by the financial institutions was by mistake offered as income. While computing the book profits u/s 115JB, assessee has inadvertently taken the carried forward depreciation as ₹ 14,86,71,093 instead of .....

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e same is provision for unascertained liability. AO carried the said adjustment to the current A.Y and reduced the same brought forward losses in the current A.Y. 5. AO erred in not considering the principal loan amounting to ₹ 9,26,00,305 claimed as capital receipt in the revised computation of income. Aggrieved, assessee filed appeal before the CIT (A). 6. During the appellate proceedings, assessee stated that the AO was incorrect in applying the ratio of the Goetze as the facts are diff .....

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- respectively. These amounts were credited to profit and loss account under schedule 14 "Other Income". The fact that the other income includes 'principOal portion of loan' was also stated in the note B-2 to schedule 19 to the Notes to Accounts'. In the computation of income, the appellant reduced interest waiver uls.43B, J since the same has been already disallowed in the respective years. However, forgot to claim the principle waiver as 'capital receipt'. In this .....

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cision of the Hon'ble Madras High Court in the case of Iskraremeco Regent Ltd 331 ITR 317, the Hon'ble Bombay High Court in the case of Mahindra & Mahindra Limited 261 ITR 501 and the Hon'ble Gujarath High Court in the case of Chetan Chemicals Pvt Ltd 267 ITYR 770 supports the above contention of the appellant. Further, the assessing officer is not correct in treating the capital receipt on . account of waiver of principle amount, merely because the appellant had credited the sam .....

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held that the claim of the assessee can be considered and the appellate authorities are well within their rights to consider the claim relying on the decision of the ITAT Hyderabad in the case of GVK Industries Ltd vs. ACIT in ITA No.1579/Hyd/2008 dated 30.03.2012. The CIT (A), therefore, held that the judgement of the Apex Court in the case of Goetz India Ltd vs. CIT (284 ITR 323) is inapplicable in this case. 8. The CIT (A) discussed various case laws and held that the assessee obtained the l .....

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opened as per the law starting from the year in which the assets were acquired from this loan and if that can be done, he directed the AO to reopen the earlier cases and consider the cost of acquisition of the capital asset connected to this loan amount as zero and disallow depreciation in all the years starting from the year in which the assets were acquired. 10. The second issue relates to the corrected figures of brought forward losses as per the books of accounts which were not considered by .....

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been reduced to the extent of ₹ 5.00 crores. The said adjustment to the losses has been carried to the current assessment year and adjusted against the brought forward losses in the computation as per section 115JB ofthe Income Tax Act, 1961. 3.4 During the course of assessment proceedings the assessee has filed a revised computation of income, stating that the brought forward losses as per books of accounts has not been calculated correctly for the purpose of section 115JB. The brought f .....

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n of the Apex Court in the case of Goetz India Ltd., Vs. CIT (284 ITR 323) in not applicable in the appellate proceedings and following the decision in the case of GVK Industries (Supra) directed the AO to compute the correct figure of brought forward losses and give credit to the assessee wherever the law so demands. 12. The CIT (A) further held that with respect to the addition of ₹ 5.00 crores, the same is added back in last year u/s 115JB of the Act and no adjustment or change in the b .....

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w in granting relief to the assessee. 2. CIT(A) erred in law in holding that capital item of ₹ 9,26,OO,306/- had to be deleted from income, as settled issues unrelated to reopening cannot be raised in reopening proceedings. 3. The decision of CIT(A) is erroneous in law because it is contrary to decision of Hon'ble Supreme Court in MIs. Sun Engineering Works Limited. 4. The C/T(A) erred in law in directing that the addition of ₹ 5 Crares is to be disallowed though in the first pla .....

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pal waiver amounting to ₹ 9,26,00,305/- was by mistake offered to income and claimed that since the said amounts are capital receipt in nature, the same cannot be brought to tax. 3.2 The plea of the assessee has been considered carefully. The assessee has not made the claim in the return of income and hence the same has been rejected respectfully following the decision of the Apex Court in the case of Goetz India Ltd (284 ITR 323) . 15. The Department has objected that the loans/reduction .....

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and issued notice u/s 143(2) and 142(1) to respond to the assessment and for filing a revised return. The Hon'ble Apex Court in the case of Goetz India Ltd vs. CIT has clearly stated that the assessing authority has no power to entertain claim made otherwise than by way of revised return. Hence, the CIT (A) erred in following the decision of GVK Industries Ltd vs. ACIT (ITA No.1579/Hyd/2008 dated 30.03.2012) as the facts in this case are not similar to that as in the case of GVK Industries. .....

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ng to tax certain income which has escaped assessment, because the controversy on re-assessment is confined to matters which are relevant only in respect of the income which had not been brought to tax during the course of the original assessment. A matter not agitated in the concluded original assessment proceedings also cannot be permitted to be agitated in the re-assessment proceedings unless relatable to the items sought to be taxed as escaped income . Indeed, in the reassessment proceedings .....

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claimed in the original assessment proceedings, unless relatable to escaped income . Even in cases where the claims of the assessee durng the course of re-assessment proceedings relating to the escaped income are accepted, still the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed. The income, for purposes of re-assessment cannot be reduced beyond the income originally assessed . 17. Hence, we are of the opinion that the CIT (A) .....

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he AO stated that consequent to this addition the loan of the assessee as per P&L a/c for the said A.Y has been reduced to the extent of ₹ 5.00 crores. The said adjustment to the loan has been carried to the current A.Y and adjusted against the brought forward losses in computation as per section 115JB of the Act. In the course of assessment proceedings assessee has filed revised computation of income stating that the brought forward losses as per books of accounts has not been calcula .....

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