Case Law Details
Pr. CIT Vs M/s. Colour Roof (India) Ltd. (Bombay High Court)
The Supreme Court in the case of Commissioner v/ s. Mahindra and Mahindra Ltd., [2018] 404 ITR 1 has held that sine-qua-non for application of Section 41(1) of the Act, is that there should have been allowance or deduction claimed by the Assessee in any Assessment Year as a loss, expenditure or trading liability incurred by the Assessee. Subsequently, if any remission or waiver is granted in respect of which such an allowance/deduction has been claimed, then the Assessee is liable to pay tax on the amount waived/ remitted under Section 41(1) of the Act. This, as the Court held is only to ensure that Assessee does not keep double benefit – one by way of deduction and another by waiver of the amount, which has already been deducted in computing the tax;
Section 28 (iv) of the Act can only apply where any benefit arises from a business or profession and such benefit is received other then in the shape of money;
In this case, the waiver of loan is, in fact, found is on capital account.
Section. 28(iv) and Section 41(1) cannot apply if the loan is on capital account and the assessee has never claimed any deduction therefor in the past.
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