TMI Blog2014 (1) TMI 1939X X X X Extracts X X X X X X X X Extracts X X X X ..... were advanced during the course of business as a matter of main object of the assessee. The assessee has used the said loans for day to day business operation in the normal course during the year when loans were raised and advanced. No capital assets has been purchased on raising of such unsecured loans. In the case of Solid Containers Ltd. vs. Dy. CIT [ 2008 (8) TMI 156 - BOMBAY HIGH COURT] the Hon ble Bombay High Court applied the decision in T.V. Sundaram Iyengar Sons Ltd. [ 1996 (9) TMI 1 - SUPREME COURT] distinguished its decision in Mahindra Mahindra Ltd [ 2003 (1) TMI 71 - BOMBAY HIGH COURT] and held that the waiver of loan taken for business purposes, the amount is retained in the business and as such, the amount that initially did not have the character of income becomes income liable to tax. Moreover, there is nothing on record that the company was dissolved and no certificate to this extent has been placed on record before any of the authorities below or even before us. Moreover, in view of the decisions relied upon hereinabove, we find no infirmity in the order of the ld. CIT(A), who has rightly confirmed the action of the A.O. Accordingly, the appeal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act by the Ld. CIT(A) Jammu is against law and facts on the file in as much as he was not justified to uphold the action of AO in making an addition of Rs.1,00,75,000/- on account of alleged remission of liability in respect of unsecured loans from Bodies Corporate on the unjustified and arbitrary ground that the same represents the income of the Appellant Company within the meaning of section 28(iv) read with Section 2(24) of the Income-tax Act, 1961. 2. That the order dated 01.04.2013 passed u/s 250(6) of the Income Tax Act by the Ld. CIT(A) Jammu is against law and facts on the file in as much as he was not justified in rejecting /denying claim made by the Appellant Company that it had become defunct and no assessment could be made as the Registrar of Companies had struck off its name from the record under the provisions of section 56 of the Companies Act, 1956 and it was not in existence on the relevant date on the ground that the case laws cited in support of such assertion are for company which were dissolved and there was a difference between a dissolved company and a defunct company. 4. First of all, we take up of the assessee in the case of M/s. Rainwari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins of Business. The business liability is taxable u/s 41(1) only if the same was allowed as admissible deduction in any earlier year. The amount of Rs.1,00,75,000/- was never claimed by the assessee as admissible deduction and hence the same cannot be taxed u/s 41(1). In this regard, the assessee relied on the decision in 155 Taxman 90. After taking into consideration all the facts enumerated above, I hold the view that even if a receipt does not fall within the ambit in any of the sub-clauses in section 2(24) it may still be income if it partakes of the nature of the income. The idea behind providing inclusive definition in section 2(24) is not to limit its meaning but to widen its net. The word income is of widest amplitude and it must be given its natural and grammatical meaning. The word income in section 2(24) is an inclusive definition. It adds several artificial categories to the concept of income but on that account the expression income does not lose its natural connotation. Thus, anything which can properly be described as income is taxable under the Act unless of course it is exempted under one or the other provisions of the Act as has been held by the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding amongst the parties, commonsense demanded that the amount should be entered in the P L account for the year and be treated as taxable income. In other words, the principle appears to be that if an amount is received in the course of trading transaction, even though it is not taxable in the year of receipt as being of revenue character, the amount changes its character when the amount becomes the assessee s own money because of any other statutory or contractual right. When such a thing happens, commonsense demands that the amount should be treated as income of the assessee. In view of the facts discussed above, I hold this amount of Rs.1,00,75,000/- represents the income of the assessee company within the meaning of section 28(iv) read with section 2(24) of the Income Tax Act, 1961 and accordingly change the same to tax. 6. The Ld. CIT(A) confirmed the action of the Assessing Officer. 7. The Ld. Counsel for the assessee, Mr. Ashwani Kumar, CA argued at the outset that the business liability is taxable under section 41(1) of the Act only if the same was allowed as admissible deduction in any earlier year. The amount of Rs.1,00,75,000/- was never claimed by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been made on the same. He relied upon the decision of the Delhi Bench of ITAT in the case of Impsat (P) Ltd. vs. ITO (2005) 92 TTJ (Del) 552 which proposition has subsequently been affirmed by the Hon ble Delhi High Court in the case of CIT vs. Vived Marketing Servicing Pvt. Ltd. ( ITA No.273/2009).s 7.2. The Ld. counsel for the assessee with regard to section 28(iv) read with section 2(24) of the Act argued that income is defined in section 2(24) in an inclusive manner which lists out several clauses which would fall within the definition of income . Even if a receipt does not fall within the ambit of any of the clause specified therein, it would still be income if it partakes the character thereof. Therefore, the word income should be given its natural and grammatical meaning and should be construed to encompass only such things which are income according to the normal import of the term. Section 4 of the Act brings to charge on total income of prima facie, in order to come within the scope of income, the receipt in question should normally be a revenue receipt and capital receipts are normally exempted. However, certain capital receipts have been specifically included i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That the assessment order dated 21.12.06 passed u/s 143(3) by the Ld. Income Tax Officer, Ward 2(2), Jammu is against the law and facts on the file in as much as the order dated 21.12.06 passed by him is illegal in view of the fact that the company had already been struck off from the record of the Registrar of Companies as a defunct company under the provisions of section 560 of the Companies Act, 1956 and was not in existence on the relevant date. 7.7. He submitted that the annual accounts for the year ended on 31st March, 2003 of M/s. Skol Breweries Limited were placed on record, which reveals that the various amounts written off had been added back in the computation of income and accordingly no deduction has been claimed. 7.8. In view of the above submissions, the ld. counsel for the assessee prayed to reverse the order of the ld. CIT(A) and allow the claim of the assessee. 8. The Ld. DR, on the other hand, at the outset, relied upon the orders of the ld. CIT(A) and the Assessing Officer. 9. We have heard the rival contentions and perused the facts of the case. At the outset, a query as posed by the Bench to the ld. counsel for the assessee as to what are the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 22.03.2012 has stated that a sum of Rs.100.75 lacs was payable to M/s. Skol Breweries Ltd. which was written back and credited directly to the Reserves and Surplus being in the nature of capital receipt and not liable to tax under any provisions of the Act. In the letter submitted on 4.11.2011, the assessee has stated that it has received a loan of Rs.100.75 from two entities i.e. Skol Manufacturing Investment Ltd. Rs.99,25,000/- and Maharashtra Distilleries Ltd. Rs.1,50,000/-. Later on, vide letter dated 22.03.2013, the assessee stated that the whole amount came from M/s. Skol Breweries Ltd. This contradiction has not been explained. It was argued that M/s. Skol Breweries has written off the amount as bad debt but subsequently added back the written off amount in the computation of income. The assessee being non banking financial company was incorporated with the main objects of giving finance and making investments and therefore taking loans and giving loans for such purpose is a part of normal business activity.. As mentioned hereinabove, the assessee has not utilized money for any capital expenditure and accordingly the decision relied upon by the ld. counsel for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before we consider the submissions of Mr. Vohra on this aspect, it would be apposite to discuss the judgment of this Court in Logitronics (supra). That was also a case where certain amount of loan and interest was waived by the financial institution as it had become Non Performing Asset (NPA) for the bank in view of the guidelines of the Reserve Bank of India. On waiver the principal amount written off was directly taken to balance sheet under the head capital reserve, was not offered for taxation. The Assessing Officer treated the said waiver of principal amount of loan as income‟ within the meaning of Section 2 (24) of the Income-Tax Act, exigible to tax. The CIT (A) deleted the addition holding that it was not an income and provisions of Section 28 (iv) as well as Section 41 (1) of the Act were not applicable. The Tribunal, however, reversed the decision of the CIT (A) giving inter alia following reasons:- (a) Since the Tribunal in the case of Tosha International Ltd. (supra) proceeded to decide the issue on the premise that loan was utilized to acquire capital assets, decision of the Tribunal as upheld by this Court would apply to the cases where the loan obtained is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between a dissolved company and a defunct company. In defunct company, the identity of the company still exists and therefore legally assessment can be made. The argument of the appellant does not have merit and thus rejected. 9.8, Moreover, there is nothing on record that the company was dissolved and no certificate to this extent has been placed on record before any of the authorities below or even before us. Moreover, in view of the decisions relied upon hereinabove, we find no infirmity in the order of the ld. CIT(A), who has rightly confirmed the action of the A.O. Accordingly, the appeal of the assessee is dismissed. 10. Now, we take up appeal of the assessee in ITA No.356(Asr)/2013 for the assessment year 2004-05 in the case of M/s. Prang Finance Investment Co.(P) Ltd. Since the facts in the present appeal i.e. in ITA Nos. 356(Asr)/2013 for the assessment years 2004-05 are identical to the facts in the appeal of the assessee in ITA No.355(Asr)/2013 for the A.Y. 2004-05, decided by us hereinabove, therefore, our order hereinabove in ITA No.355(Asr)/2013 for the A.Y. 2004-05 shall identically be applicable to appeal in ITA No. 356(Asr)/2013 for the assessment years 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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