TMI Blog2022 (6) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... iv) would not apply to waiver of loan since the waiver could not be termed as income u/s 2(24). The decision in CIT V/s Ramaniyam Homes (P) Ltd. ( 2016 (4) TMI 954 - MADRAS HIGH COURT ] as referred to by ld. CIT-DR, has already been reversed by Hon ble Supreme Court in the case of CIT V/s Mahindra Mahindra Ltd. (supra). The last aspect of the matter is that the receivables of Rs.93.45 Crores have been liquidated at Rs.46.59 Crores (Rs.43 Crores of Bank Liability + Rs.3.59 Crores receivable by the assessee) and therefore, the balance amount of Rs.46.86 Crores was to be treated as bad-debts or business loss which would clearly be allowable as deduction to the assessee. We are of the considered opinion that Ld. CIT(A) has capture the issue in correct perspective. The conclusion drawn in the impugned order are based on binding judicial precedents. Therefore, finding no reason to interfere in the same, we dismiss the appeal of the revenue. - ITA No.1932/Chny/2018, ITA No.1626/Mds/2012, ITA No.3081/Chny/2017 - - - Dated:- 20-5-2022 - HON BLE SHRI MAHAVIR SINGH, VICE PRESIDENT AND HON BLE SHRI MANOJ KUMAR AGGARWAL, AM Assessee by : Shri R. Vijayaraghavan (Advocate) Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) was satisfied with the assessee's contention and had allowed the appeal. Thus, it is to be seen as to whether the finding rendered by the Commissioner of Income Tax (Appeals) was just and proper. Paragraph 7 of the impugned order has dealt with the said issue in the following lines: In our opinion, since there is a categorical finding of the Tribunal that there was a cessation/ remission of liability under Section 41(1) of the Act on earlier occasion confirming the order of the learned Commissioner of Income Tax passed under Section 263 of the Act, wherein the learned Commissioner of Income Tax directed the Assessing Officer to verify from the assessment records whether interest/depreciation/hire charges or any other expenditure related to bank liabilityhas been claimed and allowed by the Assessing Officer in the earlier years andif 'yes', the taxability of the remission of bank liability should be examined by the Assessing Officer under relevant provisionsof the Act. The learned Assessing Officer, consequent to this, examined the issue and observed that there is remission of bank liability accrued to the assessee at Rs.46.05 Crores. Contrary to this, lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration. 9. Accordingly, the above tax case appeal is allowed, the impugned order is set aside and the matter is remanded to the Tribunal for a fresh consideration uninfluenced by the observations made in paragraph 13 of the earlier order passed by the Tribunal dated 03.4.2012. Since we have remanded the matter for a fresh consideration, it is open to both parties to raise all factual and legal contentions before the Tribunal. No costs. It is evident that the matter has been remanded back to the Tribunal for fresh consideration uninfluenced by the observations made in Para-13 of earlier order passed by the Tribunal on 03.04.2012. Before us, it is open for both the parties to raise all factual and legal contentions. Accordingly, we proceed to adjudicate the appeal as per the directions of Hon ble Court. 2. This appeal arises out of the order of learned Commissioner of Income Tax (Appeals)-III, Chennai [CIT(A)] dated 25.05.2012 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s 143(3) r.w.s. 263 of the Act on 13.12.2011. The grounds taken by the revenue read as under: - 1. filed. Evidently, the sole grievance of the revenue is delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der this aspect of the matter. Accordingly, the assessment was set-aside with a direction to Ld. AO to redo the assessment. Though the assessee challenged the revisional jurisdiction, however, it was held by the bench that the assessment order was very cryptic and there was no discussion regarding certain vital issues arising from the assessment. Accordingly, the revision was upheld vide order dated 03.04.2012. In para-13 of this order, the bench observed that the clauses in tripartite agreement would show that the liability to the consortium banks has been crystallized at Rs.43 Crores and the said amount of Rs.43 Crores was paid over to the bank. The liabilities of the assessee company towards the banks stood fully discharged and settled. The banks did not have any option for legal proceedings against the assessee or the special purpose vehicle. Therefore, it was clear that prima-facie there was a remission of liability in favor of the assessee company. This paramount issue ought to have been examined by Ld. AO in the assessment order. 4.3 Pursuant to revision order u/s 263, the assessment was reframed by Ld. AO u/s 143(3) r.w.s. 263 on 13.12.2011. The assessee submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value at which they were appearing in the books of account. The difference between the transfer price of assets being the book-value and their WDV as per Income tax Act to the extent of Rs.7.03 Crores was already offered as Short-Term Capital Gain. Further, SPV reflected the same values in their books. Accordingly, there was no waiver or benefit to the assessee as alleged by Ld. AO. 5.2 Another line of argument was that the Bank loans as received by the assessee was utilized for acquiring the capital assets which were given on hire purchase or leasing. Further, Sec.28(iv) would have no applicability in case of monetary benefits accruing. The same could also not be added u/s 41(1) since the loans were not allowed as deduction in any of the earlier years. The bank liability for Rs.89.86 Crores consist only of the principal portion of the loan and had no element of interest in it. Therefore, even if it was to be considered as waiver, it would be in capital field as per the decision of Hon ble High Court of Madras in Iskraemeco Regent Ltd. (331 ITR 317) which has distinguished the case law of Hon ble Supreme court in the case of T.V. Sundaram Iyengar Sons (222 ITR 344). 5.3 Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowable as deduction. Accordingly, the appeal was allowed on various facets against which the revenue is in further appeal before us. Our findings and Adjudication 6. We find that the material facts are not in dispute. As per the terms of Tripartite Agreement, the assessee hived-off hire purchase and leasing business to SPV and assigned corresponding receivables together with the connected bank liabilities to the SPV at book value. Pertinently, the assessee transferred the receivable of Rs.93.45 Crores together with bank liability of Rs.89.86 Crores at Book Value. The excess amount as received by the assessee over and above WDV of the asset has been offered as well as accepted as Short-Term Capital Gain. Thought the Bank Liabilities were crystalized at Rs.43 Crores, however, SPV was obligated to repay any amount received by it over and above Rs.43 Crores. Therefore, it would not be correct to say that the bank liabilities were ultimately settled at Rs.43 Crores and the balance amount was waived-off. Therefore, the provisions of Sec.41(1) could not be held to be applicable in such a case in the hands of the assessee. 7. Another undisputed fact is that the Bank Loans we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case. 2. The Commissioner of Income Tax (Appeals) erred in holding that the sum of Rs.3,81,98,688/-being the principal amount of loan waived by bank of Ceylon should be assessed either u/s 41(1) or Sec 28(iv). 3. The Commissioner of Income Tax (Appeals) erred in not specifying the section under which the amount is taxable. 4. Without prejudice the CIT(A) ought to have appreciated that the amount due to Bank Of Ceylon was only Rs.57,76,189 only and not Rs.3,81,98,688/- 5. The Commissioner of Income Tax (Appeals) ought to have appreciated that waiver of monitory loan cannot be taxed under Section 41(1) or Section 28 (iv). As evident, the assessee is aggrieved by confirmation of addition of Rs.381.98 Lacs. 12. The registry has noted a delay of 292 days in the appeal, the condonation of which has been sought by the assessee on the strength of affidavit of director of the assessee company. It has been submitted that when the impugned order was passed, the Tribunal had held that there was waiver or reduction of loan which included loan taken from Bank of Ceylon whichwas to be taxed in AY 2006-07. Accordingly, there was no question of addition in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 081/Chny/2021, AY 2009-10 16. This appeal has been filed by the revenue in the case of SPV i.e., URMPL for AY 2009-10. The appeal arises out of the order of learned Commissioner of Income Tax (Appeals)-11, Chennai [CIT(A)] dated 29.08.2017 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s 143(3) r.w.s. 147 of the Act on 12.02.2015. The grounds taken by the revenue read as under: - 1. The order of the learned CIT(A) is erroneous in law and opposed to the facts and circumstances of the case. 2.1 The learned CIT(A) erred in allowing the appeal of the assessee by deleting the bad debt written off by Ceylon Bank Limited of Rs.3,81,98,688/- during the FY 2009-10 without considering the fact: that the assessee company is Special Purpose Vehicle company appointed to manage the receivables and liabilities of M/s. India Cement Capitals and Finance Limited. 2.2 The Id. CIT(A) ought to have seen that by a tripartite agreement dated 28.6.2006, the assessee company has taken over the receivables and liabilities of M/s.India Cements Capital and Finance Limited and hence the bad debt of M/s. India Cements written off by M/s.Ceylon Bank should be taxed in the hands ..... X X X X Extracts X X X X X X X X Extracts X X X X
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