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| The Tax Publishers2020 TaxPub(DT) 0691 (Bom-HC) : (2020) 274 TAXMAN 0058 INCOME TAX ACT, 1961
Section 41(1)
Since loan was taken from acquisition of capital assets and assessee had made submissions that for chargeability under section 41(1), there should have been actual allowance made in the assessment of assessee in the earlier year, therefore, waiver of loan being waived off could not be termed as a revenue receipt and appeal of revenue was dismissed.
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Business income - Profits chargeable to tax under section 41(1) - Waiver of term-loan -
Issue arose from consideration as to whether Tribunal was justified in dismissing the appeal of the revenue on the issue of deletion of addition being disallowance of principal amount of loan waived off by lender on account of one-time settlement of loan holding that the loan was acquired for acquisition/investment of capital assets as such its waiver cannot be termed as revenue receipt. Held: Loan was taken from acquisition of capital assets. Assessee had made submissions that for chargeability under section 41(1), there should have been actual allowance made in the assessment of assessee in the earlier year. CIT(A) and Tribunal followed the decisions of this Court in the case of Mahindra and Mahindra Ltd. v. CIT ((2003) 261 ITR 501(Bom) : 2003 TaxPub(DT) 0995 (Bom-HC)) and held that on such waiver of loan taken on capital account, neither the Section 41(1) nor Section 28(iv) are applicable. Thus, the question was no longer res-integra.
REFERRED : Commissioner v. Mahindra & Mahindra Ltd. (2018) 404 ITR 1 (SC) : 2018 TaxPub(DT) 2139 (SC) CIT v. Ramaniyam Homes P. Ltd. & Ors. [in Tax Case (Appeal) No. 278 of 2014, dt. 22-4-2016] : 2016 TaxPub(DT) 2061 (Mad-HC) Mahindra & Mahindra Ltd. v. CIT (2003) 261 ITR 501 (Bom) : 2003 TaxPub(DT) 0995 (Bom-HC)
FAVOUR : In assessee's favour
A.Y. :
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