TMI Blog2018 (12) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... venue is dismissed. Addition towards ‘waiver of working capital term loan' - Held that:- We notice that the Hon’ble Delhi High Court Decision in the case of Tosha International Ltd. (2008 (9) TMI 31 - HIGH COURT DELHI) is similar to the facts of the present case held that remission of the principal amount of loan didn’t amount to income - remission would become income u/s 41(1) only if assessee has claimed deduction in respect of expenditure or trading liability - CIT(A) correct in deleting the addition made by the AO towards waiver of capital treating as revenue in nature - decided against revenue - ITA No. 668/Hyd/2016 - - - Dated:- 29-11-2018 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Revenue : Smt. Alka Rajavanshi Jain For The Assessee : Shri Ramesh Babu Kilaru ORDER PER S. RIFAUR RAHMAN, AM: This appeal is filed by the Revenue against order of CIT(A) - 2, Hyderabad, dated 29/01/2016 for AY 2011-12. 2. Brief facts of the case are that the assessee company, engaged in poultry farming, filed its return of income for the AY 2011-12 on 30/09/2011 admitting income at Nil. The assessment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee filed its original return of income on 30.09.2011 without deducting the above waived interest amount of ₹ 8,52,58,224/- for computing book profit under provisions u/s 115JB of the I.T. Act and arrived at a book profit of ₹ 2,67,57,530/-after adjusting the brought forward depreciation loss of ₹ 5.19 crores (being lower than b/fd. Business loss) Later, the assessee has realized that its case falls under Clause (vii) of Explanation (1) of Sec.115JB. Accordingly, it has filed revised return of income on 25-03-2013 by deducting the above interest waived of ₹ 8,52,58,224/- for arriving at the book profit u/s.115JB of the Act. On the other hand, while completing the scrutiny assessment, the AO has rejected the assessee's above computation. 5.2 The CIT(A) deleted the addition made by the AO by observing that assessee s case falls under clause (vii) of Explanation (1) to section 115JB of the Act. And since the assessee has fulfilled the conditions laid down in the said clause, the claim made by the assessee for deduction of waived interest of ₹ 8,52,58,224/- for computation of book profit u/s 115JB is allowed. 6. Ld. DR relied on the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in the case of CIT Vs. M/s Ramaniyam Homes P. Ltd., Tax Case (Appeal) No. 278 of 2014, judgement dated 22/04/2016. 10. On the other hand, ld. AR of the assessee submitted that these amounts cannot be classified as revenue and consequently be added to the profit loss a/c as the same is clearly on capital account and hence is clearly against the fundamental accounting principles and is also against the provisions of Companies Act,1956. In support of his submissions, he relied on the following cases: i) Asst. Commissioner of Income-Tax, company Circle V(l) Vs. SPEL semiconductors ltd (2013) 35 Taxmann.com 304 ( Chennai tribunal). ii) Iskrameco Regent Ltd Vs CIT (2011) 331 ITR 317/196 Taxmann 103/ (2010) 8 taxmann.com 119 (Madras). iii) Commissioner of Income-tax Vs. Tosha International Ltd. (2009) 176 Taxman 187 (Delhi). iv) Commissioner of Income-tax, Chennai Vs. Innovol Medical India Ltd. (2013) 38 taxmann.com 434 (Madras). v) Coastal Corporation Ltd. Vs Jt. CIT (2008) 118 TTJ 563 (Visakhapatnam) . vi) Smart Talk (P) Ltd Vs ITO, Ward 8(3)(2), Mumbai (2009) 119 ITO 13 (Mumbai). 11. Considered the rival submissions and perused the material on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above capital is applied to P L A/c. The funds, which are applied in the business are always treated as capital in nature. 12.2 In the present case, the waiver of working capital term loan has reduced the erosion of capital under the scheme, it will remain as capital transaction and it can never be treated as revenue. The ld. DR relied on the case of Ramaniyam Homes (supra) is distinguishable and cannot be applied in the present case. 12.3 We notice that the Hon ble Delhi High Court Decision in the case of Tosha International Ltd. (supra) is similar to the facts of the present case. The ratio laid down by the Hon ble Court is reproduced below: 3. The revenue went in appeal before the Tribunal against the order of the Commissioner of Income-tax (Appeals) with regard to the deletion of the said sum of ₹ 10.47 crores. We note that the Tribunal has examined the case in detail and particularly from the standpoint of the provisions of section 41(1) of the said Act. The Tribunal has observed as under:- As per our considered view, for attracting the provisions of section 41(1), the first requisite condition to be satisfied is that the assessee should have got dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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