MODERN DENIM LTD., Jaipur V. DCIT, Jaipur

ITA 140/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5183 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 26-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KALIKA SINGH; R A VARMA
• Keywords: Capital asset

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R. P.TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO.140/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 M/S MODERN DENIM LTD. , A-4, VIJAY PATH, TILAK NAGAR, JAIPUR CUKE VS. DY. CIT, CIRCLE-6, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCM 0861H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VED JAIN (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI KALIKA SINGH (CIT & SHRI R.A. VARMA, (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28.06.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 29/06/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-2, JAIPUR DATED 17.01.2014 WHEREIN THE ASSESSEE HAS TA KEN THE FOLLOWING GROUNDS: 1. THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT AM OUNT OF REMISSION OF RS. 850 LACS ON ACCOUNT OF LOAN LIABILITY IS TAXABLE IN THE HANDS OF THE APPELLANT. THE SAID ACTION IS ILLEGAL AND UNJUSTIF IED. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE REMISSION OF LOAN LIABILITY OF RS. 850 LACS ON ACCOUNT OF ONE TIME SE TTLEMENT WAS NOT TAXABLE AS INCOME OF THE COMPANY AND THE ADDITION S USTAINED IS ILLEGAL AND UNJUSTIFIED. ITA NO. 140/JP/2014 M/S MODERN DENIM LTD. JAIPUR VS. DY. IT, CIRCLE-6, JAIPUR 2 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF DENIM FABRICS HAS BE EN DECLARED AS A SICK COMPANY BY THE BOARD OF FINANCIAL RECONSTRUCTION ON 23.03.2001. AS PER THE RECONSTRUCTION AND SETTLEMENT SCHEME, THERE IS A SE TTLEMENT BY WAY OF REMISSION OF PRINCIPAL LOAN AMOUNT TAKEN FROM IFCI AMOUNTING TO RS. 850 LACS. AS PER THE ASSESSEE, THIS LOAN WAS TAKEN LONG TIME BACK FOR INSTALLING PLANT AND MACHINERY AND CONSEQUENTLY THE SAME WAS ON CAPITAL ACCOUNT AND ON REMISSION, THE SAME WAS WRITTEN BACK IN THE BOOKS O F ACCOUNT. HOWEVER, IN THE RETURN OF INCOME, THE SAME WAS NOT OFFERED TO TAX F OLLOWING THE DECISION OF BOMBAY HIGH COURT IN CASE OF MAHINDRA AND MAHINDRA (182 CTR 34) AND GUJARAT HIGH COURT IN CASE OF CHETAN CHEMICAL (P) L TD. (267 ITR 770). THE AO DID NOT AGREE WITH THE CONTENTIONS OF THE ASSESSEE AND RELYING ON THE DECISIONS OF HONBLE SUPREME COURT IN CASE OF SUNDARAM IYENGA R & SONS LTD. (222 ITR 344), THE REMISSION OF PRINCIPAL LOAN AMOUNT OF RS. 850 LACS WAS TREATED AS INCOME IN THE HANDS OF THE ASSESSEE COMPANY. 2.1 DURING THE COURSE OF HEARING, THE LD. DR BROUGH T TO THE NOTICE OF THE BENCH THAT THE ISSUE UNDER CONSIDERATION IS SQUAREL Y COVERED AGAINST THE APPELLANT BY THE ORDER OF THE HONBLE ITAT IN ASSES SEE OWN CASE IN ITA NO 531,532, AND 533/JP/2009 DATED 18.12.2009. IT WAS ACCORDINGLY SUBMITTED THAT THE SAME SHOULD BE FOLLOWED IN CASE OF THE IMP UNGED MATTER GIVEN THAT THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES O F THE CASE. 2.2 THE LD. AR SUBMITTED THAT THE EARLIER DECISION OF THE HONBLE ITAT HAS NOT BEEN ACCEPTED BY THE ASSESSEE AND THE ASSESSEE HAS FILED AN APPEAL BEFORE THE HONBLE RAJASTHAN HIGH COURT AND THE SAME IS CU RRENTLY PENDING ADJUDICATION. FURTHER, THE LD.AR SUBMITTED THAT TH E EARLIER DECISION OF THE ITA NO. 140/JP/2014 M/S MODERN DENIM LTD. JAIPUR VS. DY. IT, CIRCLE-6, JAIPUR 3 CO-ORDINATE BENCH IN ASSESSEES OWN CASE HAS NOT CO NSIDERED THE DISTINCTION BETWEEN A REMISSION OF LOAN TAKEN FOR WORKING CAPIT AL PURPOSES AND THE LOAN TAKEN ON CAPITAL ACCOUNT. FURTHER, IT WAS SUBMITTE D THAT THE HONBLE TRIBUNAL IN ONE OF THE ASSESSEES GROUP COMPANY CASE I.E, M/ S MODERN THREADS (INDIA) LTD. IN ITA NO. 622/JP/2014 AND 671/JP/2014 DATED 2 2.01.2016 WHEREIN SIMILAR ISSUE WAS INVOLVED, AFTER ELABORATELY DISCUSSING VA RIOUS JUDGEMENTS OF DIFFERENT HIGH COURTS AND ALSO TAKING NOTE OF THE EARLIER DEC ISION OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE, HAS ALLOWED THE NECES SARY RELIEF TO THE ASSESSEES GROUP COMPANY. FURTHER, IT WAS SUBMITTE D THAT THE JODHPUR BENCH OF ITAT IN THE CASE OF KANSARA MODULLAR LTD. (143 I TD 218) HELD THAT REMISSION OF LIABILITY ON ACCOUNT OF CAPITAL ASSETS WILL NOT BE TAXABLE. THE LD. AR THEREFORE SUBMITTED THAT THE EARLIER DECISION OF THE CO-ORDIN ATE BENCH IN ASSESSEE OWN CASE NEED NOT TO BE FOLLOWED IN VIEW OF THE SUBSEQU ENT DECISIONS OF THE CO- ORDINATE BENCHES WITH SIMILAR FACTS PATTERN. 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT ON IDENTICAL FACTS THE MATTER HAS BEEN DECIDED AGAINST THE APPELLANT BY THE CO-ORDINATE BE NCH VIDE ITS DECISION DATED 18.12.2009. GIVEN THAT THE ASSESSEE IS IN APPEAL A GAINST THE SAID ORDER OF THE COORDINATE BENCH BEFORE THE HONBLE RAJASTHAN HIGH COURT AND THE MATTER IS CURRENTLY PENDING ADJUDICATION, WE DEEM IT FIT AND PROPER IF THE SUBJECT MATTER IS SET-ASIDE TO THE FILE OF THE AO WHO SHALL AFTER CONSIDERING THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT SHALL PASS THE NECESSA RY ORDER. DURING THE COURSE OF HEARING, BOTH PARTIES HAVE STATED THAT TH ERE HAVE NO OBJECTIONS IF THE MATTER IS SET-ASIDE TO THE FILE OF THE AO. WE ACCO RDINGLY SET-ASIDE THE MATTER TO THE FILE OF THE AO WHO SHALL DECIDE THE SAME AFT ER CONSIDERING THE DECISION ITA NO. 140/JP/2014 M/S MODERN DENIM LTD. JAIPUR VS. DY. IT, CIRCLE-6, JAIPUR 4 OF THE HONBLE RAJASTHAN HIGH COURT IN THE ASSESSEE S OWN CASE AS REFERRED ABOVE. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29/0 6/2016. SD/- SD/- ( R.P. TOLANI ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 29/ 06 /2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S MODERN DENIM LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CIRCLE-6, JAIPUR 3. VK;DJ VK;QDR@ CIT-II , JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-II, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 140 /JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR