TMI Blog2022 (7) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... a revenue receipt. In this context, we rely on the judgment in the case of CIT v. Mahindra Mahindra [ 2018 (5) TMI 358 - SUPREME COURT] - Since the relevant extract of the Hon ble Apex Court judgment has been extracted in the impugned order of the CIT(A), the same is not reproduced. Therefore, we see no reason to interfere with the order of the CIT(A) and uphold the same as correct and in accordance with law - Decided against revenue. - ITA No.214/Bang/2020 - - - Dated:- 11-7-2022 - Shri George George K, JM And Ms.Padmavathy S, AM For the Appellant : Sri.Sumer Singh Meena, CIT-DR For the Respondent : Sri.V.Srinivasan, Advocate ORDER PER GEORGE GEORGE K, JM : This appeal at the instance of the Department is directed against CIT(A) s order dated 15.11.2019. The relevant assessment year is 2012-2013. 2. The grounds raised read as follows:- 1. Whether in facts and circumstances of the case, the ld.CIT(A) erred in holding the principal amount waived off by the bank which was utilized for trading activity is capital amount not liable for tax. 2. Whether in facts and circumstances of the case, the ld.CIT(A) erred in allowing the entire amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.119,39,96,966/- under the provisions of Sec. 41{1} of the Act. It is submitted that the appellant company had entered into a one-time settlement in respect of Term Loans availed by it in the earlier years with M/s. HSBC and Yes Bank during the year. In terms of the one-time settlement with the aforesaid banks, they had waived principal outstanding of Rs. 119,39,96,966/- apart from the waiver of interest of Rs.17,12,S5,363/-. The waiver of both the principal and interest was credited under the head Extraordinary Items in Schedule 3.24 by the appellant in the Profit and Loss account. However, while computing the Income for Income-tax purposes, the appellant, in the Statement of Total Income, excluded the waiver of principal amount as such waiver was in the nature of a capital receipt. In course of assessment proceedings, the learned A.O. called upon the appellant to state as to why the aforesaid waiver of the principal amount should not be considered as income by virtue of provisions of Sec. 41{1} of the Act. The appellant filed detailed submissions before the teamed A.O. and the same has also been reproduced in the ,impugned order. 5.1 Thereupon, the learned A.O., placi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of undercharges. The sums so collected were the property of the assessee subject to certain contingencies. It did not cease to be a trading receipt because, in the words of Ungoed-Thomas J., they might or might not have to be debited again. The assessee's account all along showed a steady surplus in this account. The claims made by the consignees were always less than the amounts received by the assessee from the collieries. As and when the consignees made their claims, they were paid. These payments will have to be treated as trading expenses. We do not see the case as a case of transaction on capital account. On the contrary, this is a simple case where trading receipts were more than expenditure. The balance will have to be brought to tax as profits of business. As pointed out by Atkinson J. in the case of Jays-The jewelers [1947] 29 TC 274 [KB], commonsense view will have to be taken in such case. 5.5 It is clear from the above aforesaid passage that the ratio of the Judgment of the Hon'ble Supreme Court has to be understood on the facts considered in the said judgment wherein certain amounts were received in ordinary course of business which were not trading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... waiver of principle is therefore opposed law and facts of the appellant s case and therefore, the same deserves to be deleted. It is prayed accordingly. 6. The learned Departmental Representative relied on the assessment order and the grounds raised. 7. The learned AR has filed a paper book enclosing therein copy of the written submissions dated 21.08.2019 filed before the CIT(A)-2, Bengaluru along with (i) Annexure-1, copy of acknowledgement along with computation of total and financial filed for the assessment year 2012-2013, (ii) Annexure 7 copy of the No due certificate from HSBC Bank for one time settlement by the assessee, (iii) Annexure-8, Copy of the no due certificate from YES bank in support of the one time settlement by the assessee, (iv) Annexure-9 copy of letter addressed to the DCIT, Circle 11(2), Bengaluru along Statement of loan and interest write back, Annexure-10 copy of ledger account of Yes Bank loan book and HSBC Bank limited for the period 01.04.2011 to 31.03.2012 reflecting the loan accounts, where the settlement entry has been passed, Annexure-11, the case laws relied on, etc. 8. Further, the learned AR as per the directions of the Bench has filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Chester Link Limited 27,30,14,614 -Others 1,08,02,495 1,14,35,71,109 Yes Bank Loan Payment made towards purchase of computer software 3,04,25,857 1,19,39,96,966 10.1 From the perusal of the above, it is clear that loans borrowed from HSBC and Yes Bank are utilized on the capital front. The assessee has also furnished the details of payments made to subsidiary and how the subsidiary has utilized these payments for acquiring controlling interest in another company. Therefore, it is clear from the material placed on record that the loans which was borrowed from HSBC and Yes Bank is for the purpose of acquisition of shares and for purchase of computer software. Since loans have been actually utilized for the above said purpose, which are on the capital front and when the same is written off during the year on a one time settlement, it is nothing but capital receipt and not a revenue receipt. In this context, we ..... 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