TMI Blog2011 (11) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... to that extent and allowing depreciation on the full value of the asset. 4. The Ld. CIT(A) has entertained fresh evidence i.e. clarification dated 07.07.2008 from auditor, as mentioned at the bottom of page-11 of the appeal order, without affording any opportunity to the Assessing Officer of examining the fresh evidence. 5. The appellant craves leave to add/alter any of the grounds of appeal 3. In ground nos.1 2, the brief facts of the case are that the assessee has raised loans from State Bank of India and M.P. Financial Corporation. It was argued by the ld. Counsel for the assessee that due to losses the assessee Company was registered as Sick Company by B.I.F.R. vide order dated 15.01.2002 as the net worth of the assessee Company plummeted into negative. The Company since was declared as sick Company, the lending institution could not recover the interest and the principal since the Company had no resources and was making losses. The State Bank of India and M.P. Financial Corporation waved certain portion of the loan and unpaid interest due to them. As per the provisions of section 43B of the Act interest on loan payable to scheduled banks and financial institut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment for the earlier years as per record. The A.O., however, rejected the rectification application moved u/s.154. Hence an appeal was also filed before the ld. CIT(A) against A.O.'s order rejecting the rectification application made u/s.154. 7. The ld. CIT(A) after examining the documents relating to sanction of loan as well as terms conditions of waiver of loan and interest and after allowing an opportunity to the A.O. to indicate whether they were not of capital nature and looking to the records held that loan waived being of capital nature can not be added back. Similarly interest waived being not allowed as a deduction can not be added back u/s 41(1) of the Act. The ld. CIT(A) also allowed set off of earlier year losses and unabsorbed depreciation as per law and penalty allowed in the appeal. The Revenue has filed the appeal against the ld. CIT(A)'s order. 8. It was further submitted that for attracting the provisions of section 41(1), the first requisite condition to be satisfied is that the assessee should have got deduction or benefit of allowance in respect of loss, expenditure or trading liability incurred by it and subsequently during any previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility. It is the loan to the assessee. In this regard reliance was placed on the judgement in CIT vs. Tosha International Limited, 209 taxation (2009) 57 (Del.) and Iskraemeco Regent Limited vs. CIT (2011) 196 Taxation 103 (Mad), copies of the judgments are filed on record. The fact of assessee's case and the case of abovementioned cases are pari-pasue. As per case law of Hon'ble Bombay High Court in the case of Mahindra Mahindra Limited vs. CIT (2003) 261 ITR 503, the principal amount of loan waived by the bank cannot be treated to be income of the assessee either within the meaning of section 41(1) of the Act or otherwise within the meaning of section 28(iv) or section 28(i) or section 2(24) of the Act. It is humbly prayed that revenues ground of appeal may be dismissed. It is submitted that prima-facie the ground raised by the revenue is misconceived. As already submitted in the statement of facts and discussed in detail by the CIT(A) in the appellate order, ₹ 1,66,55,735/- and ₹ 2,18,89,444/- out of the interest of ₹ 9,98,01,259/- were disallowed u/s. 43B in assessment year2001-02 and 2002-03 respectively. This fact was discussed on page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver of loan and interest amount as taxable liability and taxed the same under section 41(1) of the Act. The ld. CIT(A) and the Tribunal deleted the addition made as the assessee had not claimed deduction of loan and also of interest in the earlier year as an expenditure or as a trading liability. The Hon'ble High Court confirmed the Tribunal's order by holding that the Tribunal has rendered its decision on correct appreciation of law as no substantial question of law was involved and the Revenue's appeal was dismissed for the Assessment Year 2001-02. This order of the Hon'ble High Court of Delhi is dated 23.09.2008. 14. The facts in the present case are identical to the facts in the case of Tosha International Limited and Iskraemeco Regent Limited (supra). The facts in the present case are that the assessee company had been registered with B.I.F.R. and the Bank and Financial Institutions have waived loan and the interest in one time settlement. The term loan raised from M.P. Financial Corporation was used for acquiring the capital assets and directly covered by the decision in the case of Tosha International Limited and Iskraemeco Regent Limited (supra), whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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