TMI Blog2016 (12) TMI 1812X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax either u/s.41(1) or u/s.28(iv) of the IT Act. The detailed finding so recorded by CIT(A) has not been controverted by DR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the order of the CIT(A) deleting the addition made on account of remission of loan. MAT computation for remission of loan - We found that there was a remission of principal amount of loan - As decided in NILGIRI TEA ESTATES LTD. [ 2012 (2) TMI 553 - ITAT COCHIN] profit from sale of agricultural land, which is not a Capital Asset , cannot be included for the purpose of computing book profit u/s 115JB - we restore the matter back to the file of the AO for deciding afresh Charging of interest u/s.234B where income is assessed u/s.115JB - HELD THAT:- As relying on KWALITY BISCUITS LIMITED [ 2006 (4) TMI 121 - SC ORDER] we direct the AO to delete the interest charged u/s.234B - ITA No.1522/Mum/2009, ITA No.1685/Mum/2009 - - - Dated:- 6-12-2016 - SHRI R.C.SHARMA AND SHRI AMARJIT SINGH, JJ. Appellant by: Shri Rajan Vora with Shri Nikil Tiwari Respondent by: Shri B. Pruseth ORDER R.C. SHARMA, J. These are the cross appeals filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of M/s. Mahindra Mahindra Ltd. 2. On the facts and in the circumstances of the case ana in law, the learned CIT(A) has erred in deleting ₹ 114.98 Crores on account of remission of loan by Govt of Maharashtra u/s. 41 (1) / 28(iv) without considering that the waiver of liability is in character of stock-in-trade and certainly a trading liability. 3. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 4. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 4. We have considered rival contentions and found that during the course of scrutiny assessment, AO declined assessee s claim of depreciation on assets leased by assessee. By the impugned order, CIT(A) confirmed the disallowance. 5. Learned AR placed on record the order of the Tribunal in assessee s own case for the assessment year 1997-98, 2002-03 dated 22/05/2013, wherein exactly similar disallowance made by the AO was restored by the Tribunal to the file of the AO after having the following observation:- In case of M transaction of sale and leaseback took pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 Re: Question (c):- (i) This question pertains to deprecation claimed by the RespondentAssessee on its assets covered by sale and lease back agreements entered into with the Fujitsu ICIM Ltd., Konkan Railway Corpn.,Ltd., and Datar Switchgear Ltd. The Assessing Officer as well as by the CIT(A) disallowed deprecation on the assets involved in the sale and lease back agreement claimed by the Respondent-Assessee as being not genuine in respect of the Agreement entered into with Fujitsu ICIM Ltd., Konkan Railway Corpn., Ltd. Datar Swtchgear Ltd., so far as the claim for depreciation in respect of assets leased to Maharashtra Esters Keytones Pvt. Ltd., is covered, the same had been allowed by the CIT(A) on the ground that for the earlier Assessment Year, deprecation on the sale and lease back transactions has been allowed by the Revenue and forms part of the block of assets. (ii) Both the Revenue and the assessee filed appeal to the Tribunal. The Tribunal by the impugned order has held that the lower authorities had concluded that the transactions with the three parties mentioned herein above as not being genuine without any material to support the same. Further, it held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them and the remand report of the A.O. I find force in the contentions of the appellant. I agree with the A.R's that onus of establishing that a receipt is chargeable to tax is on the A.O. Reference may be made to the following observations of Supreme Court :- a) Parimisetti Seetharamamma vs. Commissioner of Income-tax (1965) 57 ITR 532 (SC) From the Head notes: By section 3 and 4, the Indian Income-tax. Act, 1922, imposes a general liability to tax upon all income. But the Act does not provide that whatever is received by a person must be regarded as income liable to tax. In all cases in which a receipt is sought to be taxed as income, the burden lies upon the department to prove that it is within the taxing provision b) CWT vs. Ellis Bridge Gymkhana (229 ITR 1 .4)(SC) The rule of construction of charging section is that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section. No one can be taxed by implication. A charging section has to be construed strictly. If a person has not been brought within the ambit of the charging section by clear words, he cannot be taxed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d observations of Bombay High Court in Mohsin's case. 4) CIT v/so Ganesa Chettiar (133 ITR l03)(Mad) The Madras High Court observed at page 105 it is settled law that a debt forgiven cannot be treated as income . The Court followed House of Lord's decision in British Mexican's case. 4.14 I may also refer to the decision of Calcutta High Court in the case of ClT vs. Stewarts and Lloyds of India Ltd (165 ITR 416) in which a subvention payment by a parent shareholder as a gesture of benevolence and goodwill was held to be in the nature of non-chargeable capital receipt. The appellant is also right in his contention that even after amendment, what can be taxed under section 41 (1) is only such remission or cessation of liability which has been allowed as expenditure or deduction in the past. Evidently and undisputably, the sum of ₹ 114.98 cr. representing loan liability towards GOM was never allowed as deduction in computing total income in the past. It is worthwhile to mention here that the entire sum of ₹ 114.98 cr represented principal amount payable to GOM and no part thereof comprised of waiver of any interest liability. 4.15 To my m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in setting up and rendering telecommunication services in the telecom circle of Rajasthan. Assessee had taken loan from a bank in connection with this project for which Qualcomm had stood as guarantor. On account of worldwide business restructuring of Qualcomm, Qualcomm expressed inability to fulfill its commitment to the assessee. At that stage, Qualcomm took over the loan liability of the assessee. The assessee stood waived and released from the liability. The assessee credited the amount of such waiver to capital reserve in its books. Question arose whether waiver of loan is income chargeable to tax in the hands of the assessee. The Tribunal held that such waiver did not constitute income of the assessee. The Tribunal has also duly considered the decision of the Supreme Court in CIT v/s Kararn Chand Thapar and Ors [222 ITR 112] [SC] and held it to be distinguishable. In Prism Cement Ltd vs. JCIT (101 ITD 103)(Mum), the assessee had issued Non-convertible debentures. Some of the debentures were forfeited by the assessee for non-payment of calls and the amount received till that date by the assessee company was credited and set off against expenditure incurred by it. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssation of a trading liability. What was borrowed by the assessee was a capital asset repayable as such, could not be repaid in view of the circumstances in which the assessee was placed. Section 41 (1) of the Act would get attracted only when there is an amount that is charged to the profit and loss account reducing the tax liability of any of the earlier years. That not being the case here, the decision of the Bombay High Court (supra) squarely apply and, accordingly, we uphold the claim of the assessee. 4.18. I may now consider the two Supreme Court decisions relied upon by the A.O. In the case of CIT vs. Kararn Chand Thapar Ors [222 ITR 112] [SC], as a mode of carrying on of his business, the assessee was making certain collections every year by his own effort on a consistent basis from its constituents. Money was not entrusted to the assessee by anybody; the assessee was making efforts to collect the amount. At the end of each year, the assessee was invariably left with substantial amount because there always remained unclaimed amounts with the assessee. On a regular consistent basis, the amount used to be credited by the assessee to profit and loss account as a tradi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering various judicial pronouncements including Bombay High Court and also considering the decision relied on by the AO, the CIT(A) has reached to the conclusion that neither the provisions of Section 41(1) is applicable nor assessee s income was liable to tax u/s.28(iv) of the IT Act. The CIT(A) has also called remand report and after considering the same and applying various proposition of the law, reached to the conclusion that remission of loan would not be chargeable to tax either u/s.41(1) or u/s.28(iv) of the IT Act. The detailed finding so recorded by CIT(A) has not been controverted by DR by brining any positive material on record. Accordingly, we do not find any reason to interfere in the order of the CIT(A) deleting the addition made on account of remission of loan. However, CIT(A) has confirmed the remission of loan of ₹ 114.98 crores while computing book profit u/s.115JB. We found that there was a remission of principal amount of loan. Similar issue has been dealt in the following judicial pronouncements:- Shree Cement Ltd., (ITA No. 503/JP/2012) dated 27th January 2014 (Jp) Shree Cement Ltd., (ITA No.614/JP/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been, as stated, carried by it in appeal before the hon ble high court. The tribunal has, in rendering its said decision, relied on the decisions by the apex court in the case of Singhai Rakesh Kumar v. Union of India (2001) 247 ITR 150 (SC) and CIT v. All India Tea and Trading Co. Ltd. (1996) 219 ITR 544 (SC), holding that the income arising on the transfer of agricultural land is not eligible to capital gains tax, being in the nature of agricultural income. Firstly, as such, there is complete parity of facts, so that we find no reason to take a different view of the matter. Secondly, the Revenue s objection is technical in nature inasmuch it concedes that the income is otherwise not chargeable to tax under the regular provisions of the Act. The provisions of Chapter XII-B of the Act do not, in our view, operate to extend the scope of `total income per section 5 on which the charge to tax u/s. 4 is attracted, but is only toward providing an alternative basis for computing the same. Reference by the ld. CIT(A) to the Circular No. 550 by the Board in this regard is in our view apposite; the receipt being admittedly a capital receipt. We therefore following the decision by the tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under:- 13. Grounds No.17 18 relate to levy of interest u/s 234B of the Act. The assessee contended before the Ld. CIT(A) that at the relevant point of time there are various decisions including the decision of Hon'ble Supreme Court in case of CIT Vs Kwality Biscuits Ltd. 284 ITR 434 wherein it had been held that no interest u/s 234B and 234C was leviable once the Income Tax is determined u/s 115JB. Assessee further contended that the non-payment of advance tax on the book profit was under bonafide belief of the assessee and therefore, the interest u/s 234B and 234C cannot be charged. 14. The Ld. CIT(A), however, did not accept the contention of the assessee and held that levy of interest u/s 234B and 234C was mandatory and consequential and hence confirmed the same. 15. Before us, at the outset, the Ld. AR of the assessee has relied upon the decision of the Co-ordinate Bench of the Tribunal in the case of Charbhuja Industries Pvt. Ltd. vs. ACIT ITA Nos.6901 6902/M/2012 order dated 24.01.2014, wherein the Co-ordinate Bench of the Tribunal, while adjudicating the identical issue has observed as under: 5. We have considered the rival submissions as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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