Waiver of loan not taxable u/s. 28(i) as it is not a business income

JCIT Vs Runwal Realtors Pvt. Ltd. (ITAT Pune)

ITAT Pune held that waiver of loan is not taxable under section 28(i) of the Income Tax Act as the same is not a business income.

Facts- The Assessing Officer(AO) in the assessment order held that the amount of waiver of loan of Rs.143,71,02,0038/- was taxable under section 28(i) and 28(iv) and 41(1) of the Act. Aggrieved by the order of the AO, the assessee filed appeal before the ld.CIT(A). However, ld. CIT(A) allowed the same.

Being aggrieved, the present appeal is filed by the revenue.

Conclusion- Held that the AO has mentioned in the assessment order that since the Loan was utilized to purchase the land, waiver of loan is business income. However, we do not agree with this proposition of the AO. We ask simple question to ourselves, is the repayment of loan allowed as business deduction? the answer is obvious no, similarly the waiver of Loan is also not business income taxable u/s 28(i) of the Act. Hence, it is not taxable under section 28(i) of the Act. We agree with the reasoning given by ld.CIT(A) while allowing appeal of the assessee. Accordingly, all grounds of appeal raised by the Revenue are dismissed.

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