TMI Blog2020 (10) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... essee company stood ceased when the amount was written off by DUBAL without any claim in future. No hesitation to hold that the addition made by the AO and confirmed by the ld. CIT(A) is correct and sustainable. Before we record our final findings and logical conclusion on the issue, we also feel it necessary and appropriate to consider the ratio of decisions relied upon by the assessee. Section 41(1) of the IT Act particularly deals with the remission of trading liability whereas in that case, waiver of loan amounts to cessation of liability other than trading liability. In the case before us, the amount was written off by DUBAL and same was written back by the assessee to the statement of profit and loss account as an extraordinary item. In the case of JSW Steel Limited [ 2017 (4) TMI 47 - ITAT MUMBAI] the issue before the Tribunal was whether the ld. CIT(A) erred in not reducing the net profit being waiver of dues while computing the book profits under section 115JB, wherein, the Tribunal held that the capital surplus on account of waiver of dues neither is taxable nor can be included in computation of book profit u/s. 115JB. This decision has also no application in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer required the assessee to furnish the details for advance against equity commitment and also to provide a copy of the JV termination letter of M/s. DUBAL and also a copy of the approval accorded by Reserve bank of India to which, the assessee furnished the above details. The AO also required the assessee to substantiate their claim, which was also furnished by the assessee. After considering the above submissions, the AO observed that the amount of ₹ 1,33,97,073/- furnished by DUBAL to the assessee, which was to be converted into equity shares upon occurrence of the financial closure of the project for which the sum was funded, has been written off by DUBAL as recoverable from the assessee. The assessee company has written back to statement of profit and loss account the monies received from DUBAL. Thus, the AO opined that the amount written back to the statement of profit and loss account of the assessee company is the amount funded additionally by DUBAL and same is to be converted into equity shares and same is revenue receipt. Hence, the contention of the assessee that the amount is capital receipt has not been found acceptable to the AO. Accordingly, the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng/2009 for assessment year 2004-05 and ors. 8. Replying to above, ld. DR, first of all, submitted that the case laws relied upon by ld. counsel for the assessee has no application to the facts and circumstances of the present case as the facts are not similar and synonymous to the case in hand. Ld. DR vehemently submitted that the authorities below have considered the entire facts and circumstances of the case, for which the amount as received by the assessee from DUBAL and thereafter it was held that the impugned amount is taxable as revenue receipts in the hands of the assessee. Ld. DR drew our attention to para 4 of the CIT(A) order and submitted that from the copy of the letter received by the revenue authorities from DUBAL, it was observed that the impugned advance amount was by the assessee company primarily for serving social needs around the project site and carrying out certain technical studies and the advance amount was spent by the assessee on revenue expenses. Ld. DR further submitted that the assessee itself credited the amount of advance in its profit and loss account as income and in the computation of income, this amount was deducted from the total income to av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd. ( 306 ITR 392) and CIT vs Maheswari Devi Jute Mills Ltd. ( 57 ITR 36) has held that capital receipts are not liable to tax under the Income tax Act, 1961. 10. The Assessing Officer dismissed the contention of the assessee by observing as under: 5.2 From the above stated facts, it is clear that the amount of ₹ 1,33,97,073 funded by M/s. DUBAL to the assessee company, which was to be converted into equity shares upon occurrence of the financial closure of the project for which the sum was funded, has been written off by M/s. DUBAL as recoverable from the assessee company. As stated at para 5.1 (vi) above, the assessee company has written back to statement of profit and loss account the monies received from DUBAL Thus, the amount written back to the profit and loss account of the assessee company is the amount funded additionally by M/s. DUBAL and that the same is to be converted into equity shares upon occurrence of the financial closure of the project. Therefore, the amount that has been written back to the profit and loss account by the assessee company is only a revenue receipt and the assessee's obligation to repay the amount to the company which had fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the assessee. Accordingly, the addition of ₹ 1,33,97,073/- made in the assessment is confirmed. 12. On careful consideration of the rival submissions and vigilant perusal of the paper book of the assessee, first of all, we observe some glaring facts regarding receipt of impugned amount by the assessee from DUBAL and we find it profitable to mention the same as follows: a) As per joint venture agreement dated 17.9.2015 between Larsen Toubro Limited (L T) and DUBAL, M/s. DUBAL acquired 20% equity stake in the assessee's company for jointly develop an integrated bauxite mine cum alumina refinery and aluminium smelter. b) In addition to above 20% stake, M/s. DUBAL also advanced ₹ 1,33,97,358.68 to the assessee company through foreign inward remittance from the period 5.1.2006 to 4.3.2010. As per letter issued by DUBAL to the assessee company vide dated 23.2.2012, this funding under joint venture agreement was to be converted into equity shares at the financial closure of the project. c) During financial period 2012-13 pertaining to assessment year 2013-14, DUBAL sold its 20% stake to VEDANTA and went out of said JV agreement. d) After exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure agreement understanding. It is also not in dispute that as per Notes -H to financial account, extracted in para 4.2.2 of the assessment order, the assessee company had obtained permission from the Reserve bank of India and, accordingly, monies received from DUBAL as advance against equity had been written back to the statement of profit and loss account as an extraordinary item for the year 2012-13. Therefore, at the time of receipt of money and at the time of written back the amount received from DUBAL, it was revenue receipt and it never took the character of capital receipt as DUBAL took exit from the joint venture agreement before financial closure of the project and DUBAL did not claim or exercise any right or privilege against the assessee company regarding impugned amount. In view of above, we are inclined to hold that the impugned amount written back to the statement of profit and loss account of the assessee is the amount funded additionally by DUBAL and same was never converted into equity shares upon occurrence of the financial closure of the project and thus, the impugned amount has been written back to the statement of profit and loss account by the assessee compan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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