ACIT Vs Sunil B Dalal (ITAT Mumbai)
The Mumbai ITAT dismissed the Revenue’s appeal against the order of the CIT(A) for A.Y. 2018-19 concerning additions under Sections 28(iv) and 56(2)(x) of the Income-tax Act, 1961. The assessee, an individual deriving income from salary, house property and other sources, was engaged in commercial lending, consultancy and real-estate investment. The Assessing Officer had made an addition of Rs. 42,45,000 under Section 28(iv) on account of write-back of an unsecured loan from Singhi Associates and an addition of Rs. 1,81,53,200 under Section 56(2)(x) concerning purchase of immovable properties below stamp duty value.
On the loan waiver issue, the assessee had received an interest-free loan of Rs. 1.40 crore from Singhi Associates, repaid Rs. 97,55,000, and the outstanding amount was written back during F.Y. 2017-18 pursuant to a mutual agreement. The AO treated the write-back as a business benefit taxable under Section 28(iv), relying on Solid Containers Ltd. v/s DCIT and CIT v. T.V. Sundaram Iyengar & Sons Ltd. The CIT(A), however, deleted the addition by following CIT Vs. Mahindra and Mahindra and holding that Section 28(iv) applies to a benefit or perquisite received in a form other than money. The Tribunal noted that the Supreme Court in Mahindra & Mahindra Limited had specifically considered Section 28(iv) and held that a loan waiver resulting in a cash receipt does not satisfy the requirement of that provision. It further noted that the Bombay High Court in CIT V Xylon Holdings (P.) Ltd. had distinguished Solid Containers and followed Mahindra & Mahindra. The Tribunal therefore confirmed deletion of the Rs. 42,45,000 addition.
