9911796707
TMI Blog2022 (7) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... training & trading in computer software and related products. For the assessment year 2012-2013, the return of income was filed on 23.11.2022, declaring loss of Rs.26,97,03,678. The assessment was selected for scrutiny and notice u/s 143(2) of the I.T.Act was issued. The assessment was completed u/s 143(3) of the I.T.Act vide order dated 31.03.2015 determining `Nil' income instead of Rs.26,97,03,678 claimed in the return of income. One of the additions made by the Assessing Officer was a sum of Rs.119,39,96,966 u/s 41(1) of the I.T.Act being loan written off. The submission of the assessee was that a sum of Rs.119,39,96,966 written off was the principal amount of loan availed by the assessee from HSBC and Yes Bank and the loans were utilized on the capital front. It was further submitted that for section 41(1) of the I.T.Act to have application, it should be a trading liability and claimed as a deduction from the income earned by the assessee in any of the previous assessment year. The objections of the assessee was rejected and the A.O. added back a sum of Rs.119,39,96,966 u/s 41(1) of the I.T.Act. The relevant finding of the A.O. reads as follows:- "The submission of the A/R o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said amount to the profit and loss account and although, it was not received as a trading result earlier, but subsequently the same will become taxable in the year under which so credited. In support of the aforesaid view, it is submitted that the learned A.O. has reproduced certain observations of the Hon'ble Apex Court as follows:- "Where an amount was initially not received a s a trading receipt, but subsequently credited to the profit and loss account shall be treated as own money of the assessee and taxable as the income of the previous year in which it was so credited". 5.2 It is submitted that there are no such observations as mentioned above in the entire judgment of the Hon'ble Supreme Court relied upon by the learned AO 5.3 Be that as it may, it is submitted that issue under dispute before the Hon'ble Supreme Court in the aforesaid case related to unclaimed balances of the assessee who was acting as Del Credere Agent of certain collieries. and also as agent of purchase of coal. The said assessee received certain amounts from the collieries on account of freight under charges for under loading of wagons. However, the purchasers had paid the full freight t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipts can never become trading receipts at all. It is very clear that the Hon'ble Supreme Court has rendered the judgment clearly holding that the trading receipts were not on capital account. Thus, the ratio of the said judgment of the Hon'ble Supreme Court is not applicable to the facts of the appellant's case and the reliance placed by the AO on the same is clearly misplaced. 5.6 It is submitted that the waiver of the principal amount of loans by the appellant on a One Time settlement with Banks are purely in the nature of a capital receipt, as a loan partakes the character of a liability .and this aspect of the matter Is not in dispute. Hence, the waiver of the principal portion of the loan by the banks will not change the character of it to a revenue receipt, which is exigible to tax. The impugned addition made for waiver of principal is therefore opposed law and facts of the appellant's case and therefore, the same deserves to be deleted. It is prayed accordingly." 5. The CIT(A) decided the issue in favour of the assessee. The CIT(A) by placing reliance on the judgment of the Hon'ble Apex Court in the case of CIT v. Mahindra & Mahindra reported in 404 ITR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time settlement, filed before the AO in course of assessment proceedings. (ii) Copy of the sanction letter dated 19.11.2008 of M/s.HSBC. (iii) Copy of the Notarial Deed / Agreement on the purchase of transfer of shares between M/s.CUBEWARE GMBH, Systat Software Gmbh (100% subsidiary of the assessee) and the assessee. (iv) Copy of the details for payments made on 01.12.2006, 19.12.2006 and 09.03.2007 by the assessee through M/s.HSBC Ltd., M.G.Road, Bangalore for purchase of software from D & J Commercial Limited for Rs.11,36,26,500/-. (v) Copy of the payment made on 28.12.2006 through HSBC Ltd. MG Road, Bagnalore for purchase of software from M/s.Sysorex Federal Inc. for Rs.3,67,27,500/-. (vi) Copy of the invoice of M/s.CHESTER LINK LIMITED dated 14.08.2006 and the details of payment to Chester Link Limited dated 26.12.2006, 07.03.2007, 20.09.2007 and 26.12.2007 for purchase of software. (vii) Copy of the purchase invoice and payment made through YES Bank Ltd for purchase of computer software. 9. The learned AR relied on the findings of the CIT(A) and reiterated the submissions made before the Income Tax Authorities. 10. We have heard rival submissions and perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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