TMI Blog2011 (6) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... n and interest. Briefly stated the facts of the case are that the assessee was having license to operate FM radio station. It was appointed by Music Broadcast Private Limited (MBPL) as an exclusive supplier for sourcing and supplying programme content for broadcasting on FM radio stations. The assessee also rendered support services to MBPL for a fixed fee. The assessee borrowed funds from Indya.com from time to time at commercial rate of interest. In turn, it entered into a loan agreement with MBPL for providing financial assistance. All the three, viz., the assesee company, MBPL and Indya.com are related concerns. Clause 8 of the assessee s agreement with MBPL provided that in the case of default on the part of MBPL the assessee will have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for broadcasting across media. As MBPL was in need of funds and accordingly it approached Indya.com which had excess funds with it. It was also stated that the net interest income was offered to tax by the assessee as income from other sources in earlier years and the Revenue authorities had accepted this stand consistently. It was also argued that the assessee was not engaged in the business of providing loans. The assessee relied on the judgement of the Hon ble Bombay High Court in the case of Mahindra Mahindra Ltd. Vs. CIT [261 ITR 501 (Bom.)]. The Assessing Officer did not accept the assessee s contention as in his opinion the loan amount of ₹ 116.52 crores along with interest for the period 1.4.2004 to 16.01.2005 amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oney or not, arising from business or the exercise of a profession shall be charged to tax under the head profits and gains of business or profession. In order to bring any receipt within the scope of sec. 28(iv), it is necessary that the same must arise from the business. Unless a receipt arises from business, it cannot be covered within the purview of this provision. Coming back to the facts of the case, it is seen that the A.O. has invoked sec. 28(iv). It implies, that he related this amount with the business. When in the earlier years the Revenue accepted this transaction of loan from Indya.com and to MBPL as not a business transaction, it cannot turn around in the later year when the situation is not suiting them. It has necessarily to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be noticed that the assessee received waiver of loan of ₹ 116.52 crores and allowed waiver of loan to the tune of ₹ 139.58 crores. The Assessing Officer has charged to tax the receipt of waiver of loan of ₹ 116.52 crores as business income together with interest of ₹ 5.47 crore but did not allow deduction for the waiver of loan allowed to the assessee to the tune of ₹ 139.58 crores. If a part of the transaction is to be considered as business transaction, then the second part of the same transaction could not have been given a different character. Both the transactions were required to be given one colour. Since it is not the business of the assessee to advance loan or receive loans, naturally the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... million has also been waived by the Company. In the opinion of the A.O. the amount of interest of ₹ 8.1 crores was chargeable to tax. The assessee remained unsuccessful before the learned CIT(A) on this issue. 6. We have heard the rival submissions and perused the relevant material on record. It is noted that the assessee received loan of ₹ 116.52 crores from Indya.com and gave loan of ₹ 139.58 crores to MBPL. The assessee paid interest to Indya.com and also charged interest from MBPL. As per the agreement dated 31.3.2005 Indya.com waived the loan of the assessee-company. Similarly MBPL incurred huge losses and was not in a position to repay the advance given by the assessee. On 31.03.2005 the Minutes of the meeti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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