Case Law Details
Technichem Organics Pvt. Ltd Vs ITO (ITAT Ahmedabad)
It is pertinent to note that the assessee has used the loan amount for capital assets and this fact was never disputed by the Revenue. The waiver of principal amount of loan which was made by the Bank has been deducted by the assessee from the outstanding loan and credited to reserves & surplus. The CIT(A) has relied upon the decision of Hon’ble Supreme Court in the case of TV Sundaram Iyengar & Sons (supra) and decision of the Hon’ble Madras High Court in case of Ramniyam Homes Pvt. Ltd. It is seen that in case of TV Sundaram Iyengar (supra) money was received by the said assesse for carrying on trading activities. But in the present assessee’s case the loan was utilized only for the purpose of obtaining capital assets. Thus, the decision of the Hon’ble Apex Court in case of Mahindra & Mahindra (supra) is applicable in the present case as in the said case it was categorically held that when the assessee had not claimed deduction under Section 36(1)(iii) of the Act for interest on loan and loan was taken for acquiring capital asset then the waiver was on account of liability other than trading liability and thus provisions of Section 41(1) does not apply in such cases. Section 28(iv) of the Income Tax Act, 1961 will not be applicable in the present assessee’s case as the receipts are in the nature of cash or money. The waiver of loan amounts to cessation of liability other than trading liability, thus, the said amount cannot fall under Section 28(iv) will not be applicable. Therefore, the Assessing Officer as well as the CIT(A) was not right in making the said addition and confirming the same.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This is an appeal filed by the assessee against the order dated 15.10.2019 passed by the CIT(A)-8, Ahmedabad for the Assessment Year 2014-15.
2. The grounds of appeal are as under:
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