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2015 (11) TMI 385 - DELHI HIGH COURT

2015 (11) TMI 385 - DELHI HIGH COURT - [2015] 378 ITR 80 (Del) - Taxability of the amount waived by the mutual funds/financial institutions/debenture holders as a concession for the financial restructuring of the assessee - ITAT allowed assessee claim - Held that:- Indisputably, the amount of principal waived by the financial institutions cannot be taxed under section 41(1) of the Act as the same had not been debited to the profit and loss account in the earlier years nor had been claimed as a d .....

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its favour, there was no question of the Revenue filing an appeal and the observation made by the Tribunal in this regard was ex facie erroneous.

The observation made by the Tribunal was with respect to the Revenue's contention that the assessee's claim could not be considered on the merits. It is, in this context, that the Tribunal observed that the Commissioner of Income-tax (Appeals)'s action of examining the assessee's claim on the merits had not been challenged. The said observat .....

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DGMENT 1. The Revenue has preferred the present appeal under section 260A of the Income-tax Act, 1961 (hereafter "the Act"), impugning an order dated March 28, 2014, passed by the Income-tax Appellate Tribunal (hereafter "the Tribunal") in I. T. A. No. 225/Del/2011 for the assessment year 2007- 08 whereby the assessee's appeal against an order dated November 2, 2010, passed by the Commissioner of Income-tax (Appeals) (hereafter "the CIT(A)") was allowed. 2. The .....

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AO") passed the assessment order dated October 23, 2009, under section 143(3) of the Act making certain disallowances with respect to the prior period expenses. 4. During the relevant period, mutual funds/financial institutions/debenture holders had waived certain amounts due from the assessee as a part of the financial restructuring scheme pertaining to the assessee. The amount waived included interest as well as the principal amount. The said amount was included as a revenue receipt and .....

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financial institutions/debenture holders was credited in the profit and loss account of the assessee and was related to the assessee's business and, therefore, was taxable under the Act. The Commissioner of Income-tax (Appeals) further observed that the assessee had not made a claim in respect of the aforesaid amount in its return of income nor had filed a revised return. 5. The assessee successfully appealed against the order passed by the Commissioner of Income-tax (Appeals) before the Tri .....

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mmissioner of Income-tax (Appeals). The learned counsel appearing for the assessee disputed the aforesaid contention and drew the attention of this court to an office note issued by the Assessing Officer, which indicated that the assessee had, in fact, made a claim for the waiver of the said principal amount to be treated as a capital receipt. 7. During the relevant period, the assessee had written back a sum of ₹ 16.85 crores on account of extraordinary items in its profit and loss accoun .....

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ure and, consequently, not taxable. 8. The office note referred to by the learned counsel for the assessee clearly indicates that the assessee had claimed the said amount as a capital receipt and had categorically submitted that the same had been inadvertently included in the computation of a taxable income by oversight. 9. In the circumstances, we are not inclined to accept the Revenue's contention that the said claim had been made for the first time before Commissioner of Income-tax (Appea .....

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