ITO Vs Tini Pharma Ltd. (ITAT Hyderabad)
The assessee company got waiver of the loan amount of Rs. 4,78,30,167/- from the Catholic Syrian bank, which was transferred to capital reserve in its books of account. The AO treated the said amount as trading receipt and brought it to tax u/s 41(1) of the Act. The CIT(A) directed the AO to delete the same as it is not income chargeable to tax which is capital in nature. ITAT upheld the decision of CIT(A) following the judgment in the case of CIT Vs. Graham Firth Steel Products (I) Ltd., [2017] 85 taxmann.com 110 (Bombay), CIT Vs Santogen Silk Mills Ltd [2015]57 taxmann.com 208 (Bombay) and CIT Vs. Xylon Holdings (P) Ltd., [2012] 26 Taxmann.com 333 (Bom.).
The alternative submission that the amount of loan written off would be taxable under Section 28(iv) of the Act also came up for consideration before this Court in the matter of Mahindra & Mahindra Ltd. ( supra) and it was held therein that Section 28(iv) of the Act would apply only when a benefit or perquisite is received in kind and has no application where benefit is received in cash or money.
FULL TEXT OF THE ITAT JUDGMENT
