TMI Blog2015 (5) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... ier assessment years by disallowing the claim of the assessee under Section 40A(3) of the Act. Therefore, as rightly pointed out by the CIT(Appeals), there is no need for disallowing the very same amount once again. - Decided in favour of assessee Addition being the principal amount waived by the financial institution - Held that:- The purpose for which the loan borrowed is capital purpose, therefore, when the loan was waived by the financial institution, it will remain as capital in nature. It cannot be treated as benefit arising in the course of business under Section 28(iv) of the Act. In the case before us, it is not known whether the loan was borrowed for the purpose of investing in the capital asset or for the purpose of meeting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written back. According to the Ld. D.R., the above said amount of ₹ 6,63,48,983/- relates to interest due to IDBI bank for the period relating to assessment years 2003-04 to 2005- 06. The IDBI agreed to the proposal for payment of one-time settlement, and accordingly, waived the interest to the extent of ₹ 6,63,48,983/-. However, for the year under consideration, the assessee claimed the interest of ₹ 6,63,48,983/- as deduction under Section 43B of the Act. The Ld. D.R. contended that under Section 43B of the Act, interest would be allowed in the case where the same was paid to the financial institution on or before filing of return of income. According to the Ld. D.R., since the entire interest was waived by IDBI Bank, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unting, was taken as income in view of Section 43B of the Act. During the year under consideration, the IDBI Bank waived the entire interest portion to the extent of ₹ 6,63,48,983/-. The assessee claimed this amount as deduction while computing the total income. The Assessing Officer disallowed the claim of the assessee on the ground that there was no actual payment of interest. However, the CIT(Appeals) found that the above sum of ₹ 6,63,48,983/-, which was debited in the Profit Loss account in the assessment years 1994-95 to 2002-03, was disallowed and the same was taken as income of the assessee. Therefore, there is no question of any disallowance once again during the year under consideration. It is not in disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the part of the loan amount along with interest waived by the financial institution, there is no change in the character with regard to original receipt which was capital in nature. Therefore, on waiver of principal amount by the financial institution, it cannot be taken as benefit or perquisite under Section 28(iv) of the Act. In view of the judgment of the Madras High Court, according to the Ld. counsel, the CIT(Appeals) has rightly allowed the claim of the assessee. 9. On the contrary, Sh. Pathlavath Peerya, the Ld. D.R. submitted that it is not known from the assessment order whether the assessee borrowed loan for investing the same in capital asset or for revenue expenditure/working expenditure. Referring to judgment of D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds, the Madras High Court found that the purpose for which the loan borrowed is capital purpose, therefore, when the loan was waived by the financial institution, it will remain as capital in nature. The Madras High Court further found that it cannot be treated as benefit arising in the course of business under Section 28(iv) of the Act. In the case before us, it is not known whether the loan was borrowed for the purpose of investing in the capital asset or for the purpose of meeting the revenue expenditure. In the absence of any details on record, this Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer. The Assessing Officer also shall examine the purpose for which the loan was borrowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
