TMI Blog2016 (2) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... ercise of the profession can be taxed. Even the Hon'ble Supreme Court in the case of Nectar Beverages Pvt. Ltd. Vs. DCIT (2009 (7) TMI 5 - SUPREME COURT ) has held that depreciation is neither a loss nor an expenditure nor a trading liability, therefore, settlement of principal amount by the bank/financial institution cannot be assessed U/s 41(1) of the Act. The other case laws referred by the AR particularly the decision in the case of Mahindra & Mahindra Ltd. Vs. CIT (2003 (1) TMI 71 - BOMBAY High Court ) and CIT Vs. Tosha International Ltd. (2008 (9) TMI 31 - HIGH COURT DELHI ) and others are squarely applicable. Therefore, we delete the addition confirmed by the ld CIT(A). - Decided in favour of assessee Addition made U/s 145A on account of excise duty leviable on closing stock - Held that:- The goods are lying in the warehouse and on production, excise duty is not payable it is payable at the time of goods cleared from the warehouse, therefore, no adjustment U/s 145A on account of excise duty is required to be made as per law.- Decided in favour of assessee - ITA No. 622/JP/2014, ITA No. 671/JP/2014 - - - Dated:- 22-1-2016 - Shri R. P. Tolani, JM And Shri T. R. Meena, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I already in our income in preceding years hence not included in this year 6574.59 C. Remission in interest already added by us in preceding year 1991.77 11507.30 Balance interest amount added in income 1815.03 He further observed that the assessee company had settled its loan and interest with bank and financial institutions and as per reconstruction and settlement scheme they have claimed the amount as given above. As per this note, it was claimed that the principal amount of 2940.94 lacs was written back and was not taxable as income. During the course of assessment proceedings, the Assessing Officer gave reasonable opportunity of being heard on this issue for treating this amount as income arising due to remission of liability. The assessee filed its reply, which has been reproduced on page 2 and 3 of the assessment order. After considering the assessee s reply, the ld Assessing Officer held that the ld AR had placed reliance on the decision of Hon ble Gujarat High Court in the case of CIT Vs. Chetan Chemicals (P) Ltd. wherein it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tio of the above cited case is squarely applicable to the facts in the instant case. In this case also, the assessee has become richer because the banks and financial institutions have written off that amount in their books and the assessee has also written back the said amount in its books. In this regard, reliance was further placed on the decisions in the case of Solid Containers Ltd. Vs DY.CIT 308 ITR 417 and Rollatainers Ltd. Vs. CIT 339 ITR 54 (Del) wherein it has been held that when a borrowing is made for carrying on regular business activity, such borrowing is called as working capital borrowing. It formed part of the trading liability of the borrower when the lender of such trading facility waives the amount either fully or in part such amount so waived or foregone was chargeable to tax as income. He also had given illustration of deeming income on the basis of given situation. Accordingly, he made addition of ₹ 2940.94 lacs in trading income due to remission of liability. 3. Being aggrieved by the order of the ld Assessing Officer, the assessee carried the matter before the ld CIT(A), who had confirmed the addition by observing as under:- 3.4 I have perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... livered before the order of the ITAT. Therefore, this issue stands covered by the above order of the jurisdictional ITAT. 3.4.3 In view of the above order of ITAT, Jaipur and the decision of the Hon'ble Supreme Court in the case of CIT Vs. Sundaram Iyengar Sons Ltd. (1996) 222 ITR 344/88 Taxman 429, the amount of remission of loan of ₹ 29,40,94,000/- is held to be income in the hands of the appellant. 4. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that U/s 28(iv), only cash benefit can be taxed. He has drawn our attention on the decision of Hon ble Bombay High Court in the case of Mahindra Mahindra Ltd. Vs. CIT (2003) 261 ITR 501 (Bom). Further this income cannot be taxed U/s 41(1). As per Section 41(1), three items i.e. loss, expenditure and trading liability can be taxed. The Hon'ble Supreme Court in the case of Nectar Beverages Pvt. Ltd. Vs. DCIT (2009) 314 ITR 314 (SC) has considered the issue of depreciation and held that it is neither a loss nor an expenditure or a trading liability hence, provisions of Section 41(1) are not applicable. The judgment of Hon'ble Supreme Court was not considered by the Hoh bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to waiver of principal amount to the extent of ₹ 10,47,93,857/-, which the assessee had directly credited to the capital reserve account. According to the Assessing Officer the assessee had derived benefit on the basis of either depreciation or utilizing the working capital which would have formed part of the earlier years income. According to the Assessing Officer since the loans ceased to exist, this amounted to cessation of liability and, therefore, it has to be treated as an income. Consequently, the Assessing Officer added the said sum of ₹ 10.47 crores in the income of the assessee. On appeal the CIT(A) and the Tribunal following the decision in Mahindra Mahindra Ltd. s case (supra) deleted the addition made by the Assessing Officer On further appeal by the revenue the Hon ble High Court did not interfere with the conclusion of the Tribunal and upheld the order passed by the Tribunal. On further appeal before the Hon ble Supreme Court Their Lordships. dismissed the Department s special leave petition against the judgment dated 23-9-2008 of the Delhi High Court in ITA No. 1143 of 2008 whereby the High Court following Mahindra Mahindra Ltd. s case (supra) uphel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) i.e. decision of Hon'ble Supreme Court in the case of CIT Vs. Sundaram Iyengar (T.V.) and Sons Ltd. (supra) is not squarely application as wherein the assessee got the benefit of depreciation and on the other hand remission of the principal, which is covered U/s 28(iv) of the Act. As per Section 28(iv) the value of any benefit or prerequisite whether converted into money or not arising from business or the exercise of the profession can be taxed. Even the Hon'ble Supreme Court in the case of Nectar Beverages Pvt. Ltd. Vs. DCIT (supra) has held that depreciation is neither a loss nor an expenditure nor a trading liability, therefore, settlement of principal amount by the bank/financial institution cannot be assessed U/s 41(1) of the Act. The other case laws referred by the AR particularly the decision in the case of Mahindra Mahindra Ltd. Vs. CIT (supra) and CIT Vs. Tosha International Ltd. (supra) and others are squarely applicable. Therefore, we delete the addition confirmed by the ld CIT(A). The assessee s appeal on this ground is allowed. 7. Now we take the revenue s appeal. The revenue s ground of appeal is against deleting the addition of ₹ 16.41 lacs made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld/ confirmed by ITAT. In AY 2008-09 also, this addition has been deleted by the CIT(A)-II, Jaipur (Appeal No. 343/2010-11, dated 20.12.2013). Respectfully following the above orders, addition to the closing stock on account of excise duty u/s 145A, is deleted. 9. Now the revenue is in appeal before us. The ld CIT DR has vehemently supported the order of the ld Assessing Officer. At the outset, the AR of the assessee has submitted that this issue is covered by the Hon ble ITAT s order in assessee s own case and excise duty is payable at the time of clearance of goods from the warehouse. He relied on the decision in the case of CIT Vs. Loknete Balasahem Desai SSK Ltd. (2011) 339 ITR 288 (Bom) wherein it has been held that relevant date for the duty liability is the date on which the goods are cleared. Therefore, the order of the ld CIT(A) may please be upheld. 10. We have heard the rival contentions of both the parties and perused the material available on the record. The goods are lying in the warehouse and on production, excise duty is not payable it is payable at the time of goods cleared from the warehouse, therefore, no adjustment U/s 145A on account of excise dut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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