TMI Blog2017 (5) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for the capital transactions has not been disputed by the AO. Thus it is clear that the instant loan was not utilized for the trading liability of the assessee and therefore the waiver off the same cannot amount to income which is chargeable to tax. See CIT v. Tosha International Ltd. [2008 (9) TMI 31 - HIGH COURT DELHI ] - Decided against revenue - ITA No. 1009/Kol/2013 - - - Dated:- 3-5-2017 - Shri Waseem Ahmed, Accountant Member And Shri S. S. Viswanethra Ravi, Judicial Member By Appellant : Shri Sallong Yaden, Addl. CIT-DR By Respondent : Shri Soumitra Choudhury, Advocate ORDER Per Waseem Ahmed, Accountant Member This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-IV, Kolkata dated 30.01.2013. Assessment was framed by JCIT(OSD), Circle-4. Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 26.12.2011 for assessment year 2009-10. Shri Sallong Yaden, Ld. Departmental Representative represented on behalf of Revenue and Shri Soumitra Choudhury, Ld. Advocate appeared on behalf of assessee. 2. First issue raised by Revenue in this appeal is that Ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e without appreciating the fact that the assessee company will get the enduring benefit from the said expenditure for a number of years to come. 5. Both the parties relied on the order of the Authorities Below as favourable to them. Ld. AR for the assessee filed paper book which is running pages from 1 to 325. 6. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, it was observed that similar issue was decided by the Co-ordinate Bench of this Tribunal in assessee s own case in its favour in ITA No.1396 1397/Kol/2011 for A.Y. 2006-07 2007-08 dated 14.10.2014. The relevant extract of the order is reproduced below:- 10. We have heard rival submissions and gone through facts and circumstances of the case. The assessee has filed complete details of repair and maintenance expenses and also a certificate from Chartered Engineer dated 15.12.2008, who has certified that the expenses under the head repairs and maintenance during the year ending 31.03.2007 has been procurement of worn out components and certain capital assets or group of assets. According to him, these worn out parts are in the context of capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into existence nor obtain a new or different advantage. (v) The quantum of expenditure nor the fact that in the process of repairs, there was substantial replacement of the parts of machine or ship is decisive of the true nature of the expenditure. (vi) The original cost of the asset is not at all relevant of or ascertainment of the true nature of the expenditure on repairs. (vii) The replacement cost of the asset may however, at times may be used as indicator of the true character of the expenditure. If the expenditure on repairs added to the written down value or disposal value exceeds the replacement cost of the asset, a presumption is possible that it is not a revenue expenditure but expenditure of capital nature. Such presumption, of course, would be rebuttable. (viii). The expression current preceding repairs appears to have been used by the legislature with a view to restricting the allowance to expenditure incurred for preservation and maintenance thereof in its current state in contradiction to that incurred on any improvement or an addition thereto [CIT v. Chowgule Co. Pvt. Ld (1995) 125 CTR (Bom) 442, 448 = (1995) 214 ITR 523 (Bom). In the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a/c and therefore, the same cannot be treated as income of the assessee. Ld. CIT(A) after considering the submission of assessee deleted the addition made by the AO by observing as under:- 5.2 I have gone through the relevant accounts and the audit report of the appellant. I find that the following things are clearly established: i. That as on 31.03.2008 the appellant company s total dues to ARCL amounted to ₹ 4516.30 lakhs ii. That on 2011.2008 the appellant has entered into a MoU with the lender M/s ARCL in accordance to which as per clause 7(i) of Part-I of Preamble, the total dues were settled at ₹ 3950 lakhs and the balance amount of ₹ 566.30 lakhs was waived off as remission of liabilities under capital account. iii. That the said amount of ₹ 5,66,31,916/- has not been shown in the main part of the P L A/c. iv. That unless an amount is allowed as deduction in previous year as expenditure, its remission or cessation cannot be brought to tax as income either u/s 28(iv) or u/s 41(1) of the IT Act, 1961. This principle has been held in the case of CIT vs. Choudhury Cotton Ginning Pressing Factory (2004) 271 ITR 17 (Punjab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h waiver cannot also be brought to tax u/s 41(1) of the Act, as no part of the waiver would have been allowed as a deduction in earlier year(s). However, waiver off of interest portion out of loan taken for trading activities and other expenditure allowed as deduction in the earlier year(s) would be brought to tax under section 41(1) of the Act in the year(s) of write-back. The provisions of section 28 of the Act deals with profits and gains of business or profession and clause (iv) thereof says that the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession shall be chargeable as income under the head Profits and gains of business or profession . In the instant case the fact that the loan was utilized for the capital transactions has not been disputed by the AO. Thus it is clear that the instant loan was not utilized for the trading liability of the assessee and therefore the waiver off the same cannot amount to income which is chargeable to tax. In holding so we find guidance support from the judgment of Hon'ble Delhi High Court in the case of CIT v. Tosha International Ltd. [2011] 331 ITR 440/[20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of expenditure or trading liability. In Mahindra Mahindra Ltd. v. CIT [2003] 261 ITR 501, Hon'ble High Court of Bombay held that no allowance or deduction having been allowed in respect of loan taken by assessee for purchase of capital assets, section 41(1) was not attracted to remission of principal amount of loan. In the instant case, the assessee has not got any deduction on account of acquisition of capital assets as the same has been reflected in the balance sheet and not in the P and L account, and also the remission of the principal amount of loan so obtained from the bank and financial institution had not been claimed as expenditure or trading liability in any of the earlier previous year. So far as waiver of interest is concerned, the assesseecompany itself has treated the same either as income or has not claimed the same as expenditure in the computation of income filed before the lower authorities. 4. We see no reason to interfere with the conclusions of the Tribunal as the same have been rendered on a correct appreciation of law. The principles enunciated in Mahindra Mahindra Ltd. v. CIT [2003] 261 ITR 501 (Bom.) are fully applicable and we see no reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
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