TMI Blog2021 (7) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... in assessee s group company case WGF Financial Services Pvt. Ltd. [ 2021 (3) TMI 394 - ITAT DELHI] we are of the considered view that when the assessee has suffered losses in the ordinary course of business as a guarantor it has to be treated as a business loss which is eligible to be written off as bad debt due to business exigencies. There is not an iota of evidence in the file if this business loss is due to collusive nature of transaction as provided u/s 36(1)(vii) of the Act. So, finding no illegality or perversity in the deletion of addition made by the ld. CIT (A), ground is determined against the Revenue. - ITA No.4656/Del./2018, ITA No.5184/Del./2018 - - - Dated:- 29-7-2021 - Shri Anil Chaturvedi, Accountant Member And Shri Kuldip Singh, Judicial Member For the Assessee : Shri V.K. Bindal, CA, Ms. Rinky Sharma, AR For the Revenue : Ms. Nidhi Srivastava, CIT DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Revenue as well as assessee have filed the aforesaid cross appeals emanated from the impugned order dated 17.05.2018 passed by the ld. CIT (Appeals)-3, Delhi. 2. Appellant, M/s. Dalmia Finance Ltd. (hereinafter referred to as the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 20,82,30,078/- derived during the year under assessment. During the scrutiny proceedings, Assessing Officer (AO) noticed that the assessee has earned capital gain amounting to ₹ 20,02,49,657/- by selling land located at Chattarpur, Delhi by virtue of sale deeds dated 07.10.2013, 12.12.2013 08.01.2014 but the capital gain was adjusted with business losses of the company. Assessee company had written off bad debts as per return of income amounting to ₹ 20,71,90,000/- as per Memorandum of Settlement dated 28.01.2014 signed by the respective parties as under :- S. No. Particulars Amount outstanding as on 31.03.2013 Amount written off Balance as on 31.03.2014 1 M/s. Altar Investment Pvt. Ltd. 7,48,80,000/- 2,98,80,000/- 4,50,00,000/- 2 M/s. Carissa Investments Pvt. Ltd. 30,75,10,000/- 15,75,10,000/- 15,00,00,000/- 3 M/s. Dalmia Housing Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the table extracted in preceding para no.4 10. At the very outset, ld. AR for the assessee fairly conceded that this issue has already been decided against the assessee by the coordinate Bench of the Tribunal in a case of WGF Financial Services Pvt. Ltd. vs. ACIT in ITA No.9218/Del/2019 for AY 2015-16 Order dated 10.02.2021 , which is a subsidiary of assessee company, and referred to paras 13 to 16 of the order (supra). This fact has also not been controverted by the ld. DR for the Revenue. 11. Assessee has challenged the taxation of surplus arising on sale of mortgage of land by the mortgagee. It is the case of the assessee that it has mortgaged its plots of agricultural land with M/s. India Bulls Finance services Ltd. as a guarantor against the loans given by M/s. India Bulls Finance services Ltd. to the group companies. The said plots of land were sold during the year to repay the lender as the guarantee was invoked by the lender. Consequently, there arose a surplus on sale of the said plots of land which was declared as long term capital gain by the assessee in its return of income filed for the year under assessment i.e. Assessment Year 2014-15 after taking the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. 15. A careful consideration of the facts on record show that the appellant company received the entire sale consideration and it cannot be said that it was a forced sale due to the pressure mounted by IBFSL. It may be possible that the plot of lands were sold under the vigil and direction of IBFSL but the fact remains that the entire sale consideration was realized by the appellant and thereafter the sale consideration was taken by IBFSL in discharge of its loan. 16. It may be possible that the buyer desired the transfer of title from the owner to avoid any litigation with the owner in future and therefore, IBFSL, after receiving ₹ 3 crores, released the mortgage in favour of the assessee, thus, facilitating the assessee to sell the land with clear title. We are of the view that the income did accrue to the assessee and it cannot be said that the assessee sold the said plots of land involuntarily as forced sale. Considering the facts of the case relating to sale of mortgaged property, we do not find any force in the claim of the assessee. Ground No. 1 is accordingly, dismissed. 14. Since this issue has already been decided against the assessee and ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement was made on 18.11.2009 which is placed at pages 127 to 131 of the Paper Book wherein the appellant company inter-alia with other three companies became guarantors by mortgaging their respective plots of land in favour of IBFSL. The borrower companies agreed to pay ₹ 20 crores as commission in lieu of the guarantee and if the guarantee is invoked by the lender, then the borrowers were to pay additional ₹ 20 crores as damages for the hardship the assessee would bear. Subsequently, the borrower companies committed defaults and the assessee company (guarantor) had to repay the loan amounts. Since the borrower companies owned shares of listed companies which were placed with IBFSL as securities, the borrower companies informed the assessee that once the outstanding liability repaid to IBFSL and as and when the shares held as security are released by IBFSL, the shares of the amount equal to the amount paid by the assessee as guarantor would be given to the assessee. Since the shares were sold by the lender company to recover its debts, therefore, borrower companies could not get their shares back and could not transfer the shares to the assessee. 18. Subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the borrowers suffered huge losses, nothing was recoverable from them and there was no point in filing legal suit. It is true that no guarantee commission has been received by the assessee from CIPL but CIPL was not in a position to make any payment to the assessee. It is true that CIPL made certain donations but that cannot be considered against the assessee as the assessee could not be held responsible for the business module of CIPL. The assessee could recover only ₹ 36.50 crores out of ₹ 64.26 crores, the balance written off may not fulfill the condition of section 36(2) of the Act but definitely a business loss suffered by the assessee in carrying out its ordinary course of business. Considering the facts of the case in totality, the write off of ₹ 27,76,92,000/- is definitely a business loss and deserve to be allowed. We accordingly direct the Assessing Officer to delete the addition of ₹ 27,76,92,000/-, Ground No.2 is accordingly allowed. 18. Following the decision rendered by coordinate Bench of the Tribunal in assessee s group company case (supra) in identical facts and circumstances of the case, we are of the considered view that when the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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