SICOM LTD, MUMBAI V. DCIT RG 3(3), MUMBAI

ITA 1522/MUM/2009

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1793 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 29-06-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 05-03-2009
• Court: TRIBUNAL
• Department Lawyers: B PRUSETH
• Keywords: Capital asset; Business income; Depreciation; Bonafide belief; Question of law; Capital receipt; Reason to believe
• Section: 143(3); 2(14); 234B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 1522 / MUM/20 09 ( ASSESSMENT YEAR : 2003 - 2004 ) M/S. SICOM LTD., NIRMAL, 1 ST FLOOR, NARIMAN POINT, MUMBAI 400 021 VS. DCIT 3(3) M UMBAI - 20 PAN/GIR NO. AAACS5524J APPELLANT ) .. RESPONDENT ) & ITA NO. 1685/ MUM/20 09 ( ASSESSMENT YEAR : 2003 - 2004 ) DCIT 3(3) MUMBAI - 20 VS. M/S. SICOM LTD., NIRMAL, 1 ST FLOOR, NARIMAN POINT, MUMBAI 400 021 PAN/GIR NO. AAACS5524J APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI RAJAN VORA WITH SHRI NIKIL TIWARI REVENUE BY SHRI B. PRUSETH DATE OF HEARING 20/09 /2016 DATE OF PRONOUNCEME NT 06 / 12 /2016 / O R D E R PER R.C.SHARMA (A.M) : THE SE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2003 - 04 IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE I.T. ACT. ` 2. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE. 1.0 IN THE FACTS AN D CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING DISALLOWANCE OF DEPRECIATION OF RS. 2,15,65,145 ON ASSETS LEASED TO KONKAN RAILWAY CORPN . LTD AND ANDHRA PRADESH STATE ELECTRICITY BOARD BY HOLDING S UCH ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 2 TRANSACTIONS TO BE FINANC E TRANSACTIONS INSTEAD OF LEASE TRANSACTIONS. 2.0 IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE REMISSION OF RS. 114,98,30,400 GRANTED BY THE GOVERNMENT OF M AHARASHTRA TOWARDS REPAYMENT OF THE SUBORDI NATED INTEREST FREE LOAN TO THE APPELLANT WAS INCLUDIBLE IN THE COMPUTATION OF 'BOOK PROFIT' UNDER SECTION 115JB DESPITE IT BEING A NON - CHARGEABLE CAPITAL RECEIPT FOR THE PURPOSES OF NORMAL PROVISIONS OF THE ACT. 3.0 IN THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING LEVY OF INTEREST U/S. 234B WITHOUT APPRECIATING THAT PROVISIONS WERE NOT ATTRACTED AS HIGH PITCHED ADDITIONS MADE BY THE A.O COULD NOT HAVE BEEN ANTICIPATED BY THE ASSESSEE. BY WAY OF ADDITIONAL LE GAL CLAIM NOT PUT FORTH BEFORE THE LOWER AUTHORITIES, IT IS SUBMITTED THAT THE LEVY OF INTEREST UNDER SECTION 234B IS NOT WARRANTED ALSO FOR THE REASON THAT THE ASSESSEE HAD RETURNED INCOME UNDER SECTION 115JB (MAT PROVISIONS) AND IN TERMS OF DECISIONS OF SUPREME COURT IN CIT VS. KWALITY BISCUITS LTD (284 ITR 434)(SC) AND BOMBAY HIGH COURT IN THE CASE OF SNOWCEM INDIA LTD VS. DCIT (2009 - TIOL - 39 - HC - MUM - IT), THE PROVISIONS OF ADVANCE TAX CHAPTER INCLUDING SECTION 234B ARE NOT AT ALL ATTRACTED IN A CASE WHERE INCOME IS ASSESSED UNDER MAT PROVISIONS. 4.0 YOUR APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALTER, DELETE AND/OR MODIFY THE ABOVE GROUNDS OF APPEAL ON OR BEFORE THE FINAL DATE OF HEARING. 3. THE GROUNDS TAKEN BY REVENUE ARE AS UNDER: - 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING RS.114.98 CRORES ON ACCOUNT OF REMISSION OF LOAN BY GOVT OF MAHARASHTRA RELYING UPON THE DECISION IN THE CASE OF M/S. MAHINDRA & MAHINDRA LTD. VS. CIT 261 ITR (501) WHEREAS FACTS OF THE PRESENT CASE IS ENTIRELY ON DIFFERENT FOOTING THAN THE CASE OF M/S. MAHINDRA & MAHINDRA LTD.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE ANA IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING RS.114.98 CRORES ON ACCOUNT OF REMISSION OF LOAN BY GO VT OF MAHARASHTRA U/S. 41 (1) / 28(IV) WITHOUT CONSIDERING THAT THE WAIVER OF LIABILITY IS IN CHARACTER OF STOCK - IN - TRADE AND CERTAINLY A TRADING LIABILITY.' ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 3 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND S BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. ' 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY.' 4. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT DURING THE COURSE OF SCRUTINY ASSESSMENT, AO DECLINED ASSESSEES CLAIM OF DEPRECIATION ON ASSETS LEASED BY ASSESSEE. BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE DISALLOWANCE. 5. LEARNED AR PLACED ON RECORD THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1997 - 98 , 2002 - 03 DATED 22/05/2013, WHEREIN EXACTLY SIMILAR DISALLOWANCE MADE BY THE AO WAS RESTORED BY THE TRIBUNAL TO THE FILE OF THE AO AFTER H AVING THE FOLLOWING OBSERVATION: - IN CASE OF M TRANSACTION OF SALE AND LEASEBACK TOOK PLACE IN THE EARLIER PREVIOUS Y EAR AND THE DEPRECIATION HAS BEEN ALLOWED IN RESPECT OF SUCH LEASED ASSETS. THUS, THE DISALLOWANCE OF DEPRECIATION IN CASE OF M CANNOT BE UPHELD MAINLY ON THE GROUND THAT THE DEPRECIATION HAS ALREADY BEEN ALLOWED IN THE EARLIER YEARS AND FORMS PART OF THE BLOCK OF ASSETS. AS REGARD THE TRANSACTIONS WITH K AND OTHER TWO PARTIES, CIT(A) HAD GONE ON A WRONG FOOTING OF JUDGING THE GENUINENESS OF THE SALE TRANSACTIONS WITHOUT ANY ADVERSE MATERIAL ON RECORD BROUGHT BY THE AO. UNDER THE SALE AND LEASE AGREEMENT, T HE ASSET WAS PURCHASED AND THE SAME WAS LEASED BACK TO THE PARTY AND THE ASSETS SO PURCHASED BELONGS TO THE ASSESSEE AS IT RETAINS THE TITLE AND OWNERSHIP OF THE SAID ASSET AND ALSO THE RIGHT OF REVERSION OF POSSESSION AT THE END OF LEASE PERIOD. THIS ISSU E HAS NOT BEEN PROPERLY DEALT WITH EITHER BY THE CIT(A) OR BY THE AO WHO HAS GONE BY THE REASONING IT IS A COLOURABLE DEVICE EITHER IN THE CASE OF K, EVEN IN THE CASE OF F AND O THE ISSUE HAS NOT BEEN EXAMINED PROPERLY. IN THE ABSENCE OF ANY PROPER MATERIA L AND RECORD TO COME TO SUCH A FINDING, MATTER RESTORED TO THE AO TO EXAMINE IT AFRESH. CIT VIS COSMO FILMS LTD., (2011) 245 CTR (DEL.) ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 4 23; INDUSIND BANK VIS ACIT, (2012) 135 ITD 165 (MURN.).. RELIED ON. 6. WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL AND FOUND THAT UNDER SIMILAR FACTS, ASSESSEES CLAIM OF DEPRECIATION WAS RESTORED BACK TO THE FILE OF THE AO. IN AN APPEAL FILED BY REVENUE BEFORE THE HONBLE BOMBAY HIGH COURT VIDE ORDER DATED 08/08/2016, WE FOUND THAT FOLLOWING QUESTION OF LAW HAS BEEN A CCEPTED BY THE HIGH COURT. (C) WHETHER ON T HE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ISSUE OF DEPRECATION CLAIMED IN RESPECT OF ASSETS INVOLVE D IN SALE & LEASE BACK TRANSACTIONS ENTERED DURING THE Y EAR, TO THE FILE OF THE A O BY RELYING ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF COSMO FILMS (2 011) 338ITR 266 (DELHI), WITHOUT APPRECIATING TH AT THE FINDING OF THIS CASE IS CLEARLY DISTINGUISHABLE FROM THAT OF COSMO FILMS LTD., WHERE A SUM WAS RETAINED BY THE LES SOR FOR THE SECURITY OF THE LEASED EQUIP M ENTS, WHEREAS IN THE PRESENT CASE, SOME OF THE ASSETS WERE RETAINED IN THE NA ME OF LESSOR FOR SECURING THE FINANCED AMOUNT? 7. WHILE CON FIRMING THE ORDER OF THE TRIBUNAL, HONBLE HIGH COURT IN ITS ORDER DATED 08/08/2016 OBSERVED AS UNDER: - 5 RE: QUESTION (C): - (I) THIS QUESTION PERTAINS TO DEPRECATION CLAIMED BY THE RESPONDENT- ASSESSEE ON ITS ASSETS COVERED BY SALE AND LEASE BACK AGREEMENTS ENTERED INTO WITH THE FUJITSU ICIM LTD., KO NKAN RAILWAY CORPN.,LTD., AND DATAR SWITCHGEAR LTD. THE ASSESSING OFFICER AS WELL AS BY THE CIT(A) DIS ALLOWED DEPRECATION ON THE ASSETS INVOLVED IN THE SALE AND LEASE BACK AGREEMENT CLAIMED BY THE RESPONDENT - ASSESSEE AS BEING NOT GENUINE IN RESPECT OF THE AGREEMENT ENTERED INTO WITH FUJITSU ICIM LTD., KONKAN RAILWAY CORPN., LTD. & DATAR SWTCHGEAR LTD., SO FAR AS THE CLAIM FOR DEPRECIATION IN RESPECT OF ASSETS LEASED TO MAHARASHTRA ESTERS & KEYTONES PVT. LTD., IS COVERED, THE SAME HAD BEEN ALLOWED BY THE CIT (A) ON THE GROUND THAT FOR THE EARLIER ASSESSMENT YEAR, DEPRECATION ON THE SALE AND LEAS E ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 5 BACK TRANSACTIONS HAS BEEN ALLOWED BY THE REVENUE AND FORMS PART OF THE BLOCK OF ASSETS. (II) BOTH THE REVENUE AND THE ASSESSEE FILED APPEAL TO THE TRIBUNAL. THE TR IBUNAL BY THE IMPUGNED ORDER HAS HELD THAT THE LOWER AUTHORITIES HAD CONCLUDED THAT THE TRANSACTIONS WITH THE THREE PARTIES MENTIONED HEREIN ABOVE AS NOT BEING GENUINE WITHOUT ANY MATERIAL TO SUPPORT THE SAME. FURTHER, IT HELD THAT THE ISSUE HAD NOT BEEN P ROPERLY EXAMINED BY THE AUTHORITIES UNDER THE ACT. IN THE ABOVE REVIEW, IT RESTORED THE ISSUE TO THE ASSESSING OFFICER TO DECIDE THE NATURE OF TRANSACTIONS ON EXAMINATION OF THE SALE AND LEASE AGREEMENT ENTERED BY THE RESPONDENT - ASSESSEE WITH THE THREE AFO REMENTIONED LESSEES I.E. FUJITSU ICIM LTD., KONKAN RAILWAY CORPN. LTD., AND DATAR SWITCHGEAR LTD. (III) WE FIND THAT THE IMPUGNED ORDER OF THE TRIBUNAL RESTORED THE ISSUE TO THE ASSESSING OFFICER TO DECIDE THE NATURE OF TRANSACTIONS ON EXAMINATION OF THE SALE AND LEASE AGREEMENT ENTERED INTO BY THE RESPONDENT - ASSESSEE WITH ITS LESSEES. THIS REMAND WAS WITH A SPECIFIC DIRECTION THAT THE ASSESSING OFFICER WOULD EXAMINE THE SALE AND LEASE BACK TRANSACTIONS ENTERED INTO BY THE RESPONDENT - ASSESSEE WITH THE THR EE PARTIES AND DECIDE THE ISSUE AFRESH, KEEPING IN VIEW THE DECISION OF THE DELHI HIGH COURT IN CIT V/S. COSMO FILMS LTD., 338 ITR 266. (IV) MR. KOTANGLE, LEARNED COUNSEL APPEARING FOR THE REVENUE HAS NOT EVEN ATTEMPTED TO SHOW US AS T O WHY THE DECISION O F THE DELHI HIGH COURT IN COSMO FILMS LTD., (SUPRA) SHOULD NOT BE TAKEN INTO CONSIDERATION WHILE DETERMINING THE NATURE OF THE TRANSACTIONS ENTERED INTO BY THE RESPONDENT - ASSESSEE WITH ITS THREE LESSEE ON EXAMINATION OF THE SALE AND LEASE AGREEMENTS. WE FI ND THAT THE DECISION OF DELHI HIGH COURT IN COSMO FILMS (SUPRA) IS ON AN IDENTICAL FACT SITUATION AND MERE TAKING OF SECURITY DEPOSITS FROM THE LESSEE IN THAT CASE IS NOT A DISTINCTION WHICH WOULD MAKE IT INAPPLICABLE TO THE PRESENT FACTS. (V) IN VIEW OF THE ABOVE, THE QUESTION (C) AS FORMULATED FOR OUR CONSIDERATION DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. HENCE NOT ENTERTAINED. 8. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL WHICH HAS BEEN CONFIRMED BY THE HONBLE HIGH COURT, WE RESTORE THE ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 6 MATTER BACK TO THE FILE OF THE AO FOR DECIDING AFRESH IN TERMS OF DIRECTION GIVEN BY THE TRIBUNAL IN ITS ORDER DATED 22/05/2013. 9. ASSESSEE IS ALSO AGGRIEVED FOR CONFIRMING ADDITION OF REMISSION OF LOAN OF RS.114.98 CRORES BOTH UNDER THE NORMAL PROVISION AND ALSO U/S.115JB. 10. BY THE IMPUGNED ORDER, CIT(A) DELETED THE ADDITION MADE UNDER NORMAL COMPUTATION OF INCOME AFTER HAVING THE FOLLOWING OBSERVATION: - 4.12 I HAVE CAREFULLY CONSIDERED THE AS S ESSMENT ORDER, CONTENTIONS OF THE APPELLANT, CASE LAWS RELIED UPON BY THEM AND THE REMAND REPORT OF THE A.O. I FIND FORCE IN THE CONTENTIONS OF THE APPELLANT. I AGREE WITH THE A.R'S THAT ONUS OF ESTABLISHING THAT A RE CEIPT IS CHARGEABLE TO TAX IS ON THE A.O. REFERENCE MAY BE MADE TO TH E FOLLOWING OBSERVATIONS OF SUPREME COURT : - A) PARIMISETTI SEETHARAMAMMA VS. COMMISSIONER OF INCOME - TAX (1965) 57 ITR 532 (SC) FROM THE HEAD NO TES: 'BY SECTION 3 AND 4, THE INDIAN INCOME - TAX. ACT, 1922, IMPOSES A GENERAL LIABILITY TO TAX UPON ALL INC OME. BUT THE ACT DOES NOT PROVIDE THAT WHATEVER IS RECEIVED BY A PERSON MUST BE REGARDED AS INCOME LIABLE TO TAX. IN ALL CASES IN WHICH A RECEIPT IS SO UGHT TO BE TAXED AS INCOME, THE BURDEN LIES UPON THE DEPARTMENT TO PROVE THAT IT IS WITHIN THE TAXING PRO VISION' B) CWT VS. ELLIS BRIDGE GYMKHANA (229 ITR 1.4)(SC) 'THE RULE OF CONSTRUCTION OF CHARGING SECTION IS THAT BEFORE TAXING ANY PERSON , IT MUS T BE SHOWN THAT HE FALLS WITHIN THE AMBIT OF THE CHARGING SECTION BY CLEAR WORDS USED IN THE SECTION. NO ONE CAN BE TAXED BY IMPLICATION. A CHARGING SECTION HAS TO BE CONSTRUED STRICTLY. IF A PERSON HAS NOT BEEN BROUGHT WITHIN THE AMBIT OF THE CHARGING SECTION BY CLEAR WORDS, HE CANNOT BE TAXED AT ALL'. 4.13 I ALSO AGREE WITH THE A.R THAT BUT FOR PROVISIONS OF SECTION 41 (L) OF THE ACT REMISSION OF DEBT IS NOT A CHARGEABLE RECEIPT AT ALL. PRIOR TO AMENDMENT TO 1922 ACT, COURTS HAD ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 7 CONSISTENTLY HELD THAT REMISSION OF A DEBT CANNOT RESULT IN INCOME EVEN IF THE TRANSACTION GIVING RISE TO DEBT HAD ORIGINATED IN THE REGULAR BUSINESS TRANSACTIONS. THE FOLLOWING CASE LAWS/PRECEDENTS SUPPORT THIS POSITION : - 1) MOHSIN REHMAN PENKAR V/S CIT (16 ITR 183) (BOM ). IN THIS CASE, THERE WAS WAIVER OF LOAN [INCLUDING WAIVER OF INTEREST EXPENSE COMPONENT]. FOLLOWING JUDGEMENT OF HOUSE OF LORDS IN THE CASE OF BRITISH MEXICAN PETROLEUM COMPANY'S CASE, THE HIGH COURT HELD 'IT IS IMPOSSIBLE TO SEE HOW A MERE REMISSION WHICH LEADS TO THE DISCHARGE OF THE LIABILITY OF THE DEBTOR CAN EVER BECOME INCOME FOR THE PURPOSES OF TAXATION'. 2) BRITISH MEXICAN PETROLEUM CO. V/SO JACKSON (16 TC 570) (HL). IN THIS CASE, THE ASSESSEE USED TO PURCHASE RAW MATERIAL FROM A SUPPLIER WHO WAS ALSO THE PROMOTER OF THE COMPANY. THUS, THE TRANSACTIONS BETWEEN TWO COMPANIES WERE IN THE REGULAR COURSE OF BUSINESS. THE DEBTOR CREDITOR RELATIONSHIP WAS ESTABLISHED BETWEEN THE PARTIES IN THE COURSE OF BUSINESS TRANSACTIONS. AT A LATER DATE, THERE WAS REMISSION OR WAIVER OF INDEBTEDNESS [INCLUDING INDEBTEDNESS WHICH AROSE DUE TO SUPPLIES EFFECTED DURING THE YEAR OF REMISSION]. THE RELEASE FROM LIABILITY WAS NOT REGARDED AS A TRADING RECEIPT. THE COURT HELD 'HOW ON EARTH THE FORGIVENESS IN THAT YEAR OF A PAST I NDEBTEDNESS CAN ADD TO THOSE PRO FITS, I CANNOT UNDERSTAND'. THIS DECISION HAS BEEN CONSISTENTLY FO LLOWED BY THE INDIAN COURTS INCLUDING IN THE CASE OF BOMBAY HIGH COURT IN MOHSIN REHMAN' S CASE (16 ITR 183 )(BOM) WHICH HAS INCIDENTALLY BEEN APPROVED IN SUPREME COURT DECISION IN CIT V IS. KARALA ESTATE (161 ITR 155). 3) CIT V/SO KARALA ESTATE MOORAD C HALAPURAM (161 ITR 155)(SC) THIS CASE WAS DECIDED BY THE SUPREME COURT UNDER AGRICULTURAL INCOME TAX ACT WHICH ( DID NOT CONTAIN FICTION PARALLEL TO THE FICTION CONTAINED IN SECTION 41 OF THE ACT. THE C OURT WAS CONCERNED WITH TAXABILITY OF WAIVER OF INTE REST WHICH W AS DEDUCTED IN COMPUTATION OF INCOME OF AN EARLIER YEAR. ACCORDING TO THE COURT, REMISSION OF THE AMOUNT DID NOT HAVE ANYTHING TO DO WITH THE ACTIVITIES OF ASSESSEE NOR WITH ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 8 THE AGRICULTURAL OPERATIONS OF THE ASSESSEE. THE COURT APPROVED OBSERV ATIONS OF BOMBAY HIGH COURT IN MOHSIN'S CASE. 4) CIT V/SO GANESA CHETTIAR (133 ITR L03)(MAD) THE MADRAS HIGH COURT OBSERVED AT PAGE 105 'IT IS SETTLED LAW THAT A DEBT FORGIVEN CANNOT BE TREATED AS INCOME'. THE COURT FOLLOWED HOUSE OF LORD'S DECISION IN BRITISH MEXICAN'S CASE. 4.14 I MAY ALSO REFER TO THE DECISION OF CALCUTTA HIGH COURT IN THE CASE OF CLT VS. STEWARTS AND LLOYDS OF INDIA LTD (165 ITR 416) IN WHICH A SUBVENTION PAYMENT BY A PARENT SHAREHOLDER AS A GESTURE OF BENEVOLENCE AND GOODWILL WAS HELD TO BE IN THE NATURE OF NON - CHARGEABLE CAPITAL RECEIPT. THE APPELLANT IS ALSO RIGHT IN HIS CONTENTION THAT EVEN AFTER AMENDMENT, WHAT CAN BE TAXED UNDER SECTION 41 (1) IS ONLY SUCH REMISSION OR CESSATION OF LIABILITY WHICH HAS BEEN ALLOWED AS EXPENDIT URE OR DEDUCTION IN THE PAST. EVIDENTLY AND UNDISPUTABLY, THE SUM OF RS. 114.98 C R . REPRESENTING LOAN LIABILITY TOWARDS GOM WAS NEVER ALLOWED AS DEDUCTION IN COMPUTING TOTAL INCOME IN THE PAST. IT IS WORTHWHILE TO MENTION HERE THA T THE ENTIRE SUM OF RS. 11 4.98 C R REPRESENTED PRINCIPAL AMOUNT PAYABLE TO GOM AND NO PART THEREOF COMPRISED OF WAIVER OF ANY INTEREST LIABILITY. 4.15 TO MY MIND, THE FACTS OF THE APPELLANT'S CASE FALL SQUARELY WITHIN THE COMPASS OF BOMBAY HIGH COURT'S DECISION IN THE CASE OF MAHI NDRA & MAHINDRA LTD VS. CIT (261 ITR 501). IN THIS CASE, THE APPELLANT, HAD IMPORTED TOOLINGS. AMOUNT PAYABLE TO THE SUPPLIER WAS TREATED AS LOAN ACCOUNT OF THE SUPPLIER. THE TOOLINGS WERE IMPORTED FOR USE IN THE BUSINESS. DEPRECIATION WAS ALSO CLAIMED IN RESPECT OF THE COST OF TOOLINGS. THERE WAS WAIVER OF THE PRINCIPAL 10A11 AMOUNT AS ALSO THE OUTSTANDING INTEREST COMPONENT. THE INTEREST COMPONENT WAIVER WAS ACCEPTED AS INCOME IN VIEW OF SECTION 41 OF THE ACT. WAIVER OF PRINCIPAL LOAN AMOUNT WAS REGARDED AS NON TAXABLE AS THE PREREQUISITES OF SECTION 41 WERE ABSENT IN RESPECT OF THE PRINCIPAL DEBT AMOUNT. INCIDENTALLY, IN THIS CASE, THE COURT ALSO HELD THAT SECTION 28(IV) HAD NO APPLICATION IN RELATION TO SUCH ITEM. THE OTHER CASES RELIED UPON BY THE A.R S REINFORCE AND CONSOLIDATE THE ABOVE POSITION. IN COMFUND FINANCIAL SERVICES (I) LTD. VLS. DCIT (67 ITD 304(BANG), THE ASSESSEE WAS NON BANKING FINANCIAL COMPANY AND WAS IN THE FUND BASED ACTIVITY OF SECURITIES. IT USED TO HAVE BUSINESS DEALINGS WITH ITS O WN PARENT COMPANIES VIZ. DEUTSCHE BANK (DB). THERE WERE LOAN ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 9 TRANSACTIONS WITH THE PARENT COMPANY. THERE WAS WRITE BACK OF THE PRINCIPAL AMOUNT OF THE LOAN. THE LOAN TR A N CTIONS WERE REGARDED ON CAPITAL ACCOUNT AND THE WAIVER OR REMI SS ION OF S UCH LIABILITY WAS CONSIDERED AS A NON CHARGEABLE CAPITAL RECEIPT. THE COURT HELD THAT IN RELATION TO REMISSION OF PRINCIPAL AMOUNT, THE PROVISIONS OF SECTION 41(1) CANNOT BE HELD APPLICABLE. THE TRIBUNAL ALSO REJECTED APPLICABILITY OF SECTION 28(IV) OF THE ACT. IN APR L TD VS DCIT (87 ITD 618)(HYD), THERE WAS LOAN ADVANCED BY A SWEDISH PARENT COMPANY TO THE INDIAN COMPANY. THE PARENT COMPANY (AS IN THE CASE OF THE APPELLANT COMPANY) WANTED TO DIVEST ITSELF OF THE SHARES. THERE WAS RENUNCIATION OF INTEREST FREE UNSECURED L OAN. THE TRIBUNAL, AFTER DULY CONSIDERING APEX COURT DECISION IN THE CASE OF T.V. SUNDARAM IYENGAR AND SONS LTD., TOOK A VIEW THAT, IN RESPECT OF AN AMOUNT LIKE SECURITY DEPOSIT OR LOAN, THE CHARACTER OF REMISSION IS ALWAYS OF A CAPITAL RECEIPT AND REMISSI ON DOES NOT GIVE RISE TO ANY INCOME OF CHARGEABLE NATURE. 4.16 IN SHYAM TELELINK LTD VS. IT O (99 ITD 576)(DEL), A US COMPANY M/S. QUALCOMM HAD COMMITTED TO PROVIDE TELECOMMUNICATION INFRASTRUCTURE AND TO ASSIST THE ASSESSEE IN SETTING UP AND RENDERING TE LECOMMUNI CATION SERVICES IN THE TELECOM CIRCLE OF RAJASTHAN. ASSESSEE HAD TAKEN LOAN FROM A BANK IN CONNECTION WITH THIS PROJECT FOR WHICH QUALCOMM HAD STOOD AS GUARANTOR. ON ACCOUNT OF WORLDWIDE BUS INESS RESTRUCTURING OF QUALCOMM, QUALCOMM EXPRESSED INABI LITY TO FULFILL ITS COMMITMENT TO THE ASSESSEE. AT THAT STAGE, QUALCOMM TOOK OVER THE LOAN LIABILITY OF THE ASSESSEE. THE ASSESSEE STOOD WAIVED AND RELEASED FROM THE LIABILITY. THE ASSESSEE CREDITED THE AMOUNT OF SUCH WAIVER TO CAPITAL RESERVE IN ITS BOOKS . QUESTION AROSE WHETHER WAIVER OF LOAN IS INCOME CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE. THE TRIBUNAL HELD THAT SUCH WAIVER DID NOT CONSTITUTE INCOME OF THE ASSESSEE. THE TRIBUNAL HAS ALSO DULY CONSIDERED THE DECISION OF THE SUPREME COURT IN CIT V /S KARARN CHAND THAPAR AND ORS [222 ITR 112] [SC] AND HELD IT TO BE DISTINGUISHABLE. IN PRISM CEMENT LTD VS. JCIT (101 ITD 103)(MUM), THE ASSESSEE HAD I S SUED NON - CONVERTIBLE DEBENTURES. SOME OF THE DEBENTURES WERE FORFEITED BY THE ASSESSEE FOR NON - PAYMENT OF CALLS AND THE AMOUNT RECEIVED TILL THAT DATE BY THE ASSESSEE COMPANY WAS CREDITED AND SET OFF AGAINST EXPENDITURE INCURRED BY IT. THE A.O. AND CIT(A) HELD THAT BY FORFEITURE OF DEBENTURES THE ASSESSEE DERIVED BENEFIT IN MONETARY TERMS WHICH WA S LIABLE T O BE TAXED AS INCOME. THEY HELD THAT SINCE THE RAISING OF DEBENTURES WAS IN THE COURSE OF BUSINESS, FORFEITURE THEREOF FELL ON REVENUE ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 10 ACCOUNT. THE A.O. IN THAT CASE HAD RELIED UPON THE DECISION OF SUPREME COURT IN THE CASE OF CIT VS. T.V.SUNDARAM LYENGAR & S ONS LTD (222 ITR 344). THE TRIBUNAL NEGATIVED THE CONTENTION OF THE LOWER AUTHORITIES BY HOLDING THAT THE RAISING OF DEBENTURES WAS A CAPITAL ACCOUNT TRANSACTION AND SUBSEQUENT REMISSION THEREOF WOULD NOT MAKE IT TAXABLE AS INCOME. THE TRIBUNAL ALSO HEL D THAT SUCH REMISSION CANNOT BE CHARGED TO TAX U/. 41 (1) SINCE THE CORRESPONDING LIABILITY WAS NOT ALLOWED AS DEDUCTION IN EARLIER YEARS. THE DECISION OF DEEPAK FERTILI S ER S AND PETROCHEMICALS CORPORATION LTD S. DCIT (304 ITR 1 67)(MUM) (AT) IS ALSO ON SIMI LAR FACTS AND IT HAS FOLLOWED THE DECISION OF PRISM CEMENTS CASE. 4.17. IN A RECENT DECISION OF THE BANGALORE TRIBUNAL IN THE 'CASE OF MANIPAL FINANCE CORPORATION LTD VS. DCIT (2008 - TIOL - 245 - ITAT - BANG), THE ASSESSEE WAS A NON-BANKING FINANCE COMPANY (N BFC) ENGAGED IN FINANCE BUSINESS BY ACCEPTING DEPOSITS FROM DEPOSITORS. IN VIEW OF FINANCIAL CRISIS AND LOSSES, IT WAS UNABLE TO REIMBURSE THE DEPOSITS TO THE DEPOSITORS IN FULL AND HENCE IT ENTERED INTO A COMPROMISE WITH THE DEPOSITORS WHEREBY A PORTION O F THE PRINCIPAL AMOUNT OF THE DEPOSITS AND ACCRUED INTEREST THEREON WERE FOREGONE BY THE DEPOSITORS. THE ISSUE BEFORE THE TRIBUNAL WHETHER THE PRINCIPAL AMOUNT OF DEPOSITS FOREGONE BY THE DEPOSITORS WAS LIABLE TO TAX AS INCOME. THE TRIBUNAL RELIED UPON THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF MAHINDRA & MAHINDRA VS. CIT (261 ITR 501 ) AND HELD THAT WAIVER OF PRINCIPAL AMOUNT OF LOAN IS NOT INCOME AND PROVISIONS OF SECTION 41 (1) CANNOT BE APPLIED SINCE IT DOES NOT REPRESENT CESSATION OF TRADING L IABILITY. THE TRIBUNAL OBSERVED AS FOLLOWS : - 'AFTER CONSIDERING THE RIVAL SUBMISSIONS IN OUR OPINION, THE FOLLOWING UNDISPUTED FACTS EMERGE OUT. THE BALANCE AMOUNT OF DEPOSIT WHICH COULD NOT BE PAID BY THE ASSESSEE TO THE DEPOSITORS WAS NEVER A CHARGE T O THE PROFIT AND LOSS ACCOUNT AND THEREBY AT NO POINT THE TAX LIABILITY, IF ANY, OF THE EARLIER YEARS WAS REDUCED. WE FIND THE SITUATION IS IDENTICAL TO THE ONE THAT WAS CONSIDERED BY THE BOMBAY HIGH COURT. THERE IS NO CESSATION OF A TRADING LIABILITY. WHA T WAS BORROWED BY THE ASSESSEE WAS A CAPITAL ASSET REPAYABLE AS SUCH, COULD NOT BE REPAID I N VIEW OF THE CIRCUMSTANCES IN W HICH THE ASSESSEE WAS PLACED. SECTION 41 (1) OF THE ACT WOULD GET ATTRACTED ONLY WHEN THERE IS AN AMOUNT THAT IS CHARGED TO T HE PROFI T AND LOSS ACCOUNT REDUC ING THE TAX LIABILITY OF ANY OF THE EARLIER YEARS. THAT NOT BEING THE CASE HERE, THE DECISION OF THE BOMBAY ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 11 HIGH COURT (SUPRA) SQUARELY APPLY AND, ACCORDINGLY, WE UPHOLD THE CLAIM OF THE ASSESSEE.' 4.18. I M AY NOW CONSIDER THE TW O SUPREME COURT DECISIONS RELIED UPON BY THE A.O. IN THE CASE OF CIT VS. KARARN CHAND THAPAR & ORS [222 ITR 112] [SC], AS A MODE OF CARRYING ON OF HIS BUSINESS, THE ASSESSEE WAS MAKING CERTAIN COLLECTIONS EVERY YEAR BY HIS OWN EFFORT ON A CONSISTENT BASIS FROM ITS CONSTITUENTS. MONEY WAS NOT ENTRUSTED TO THE ASSESSEE BY ANYBODY; THE ASSESSEE WAS MAKING EFFORTS TO COLLECT THE AMOUNT. AT THE END OF EACH YEAR, THE ASSESSEE WAS INVARIABLY LEFT WITH SUBSTANTIAL AMOUNT BECAUSE THERE ALWAYS REMAINED UNCLAIMED AMOU NTS WITH THE ASSESSEE. ON A REGULAR CONSISTENT BASIS, THE AMOUNT USED TO BE CREDITED BY THE ASSESSEE TO PROFIT AND LOSS ACCOUNT AS A TRADING RECEIPT. AS THE SUPREME COURT ITSELF OBSERVED AT PAGE 130 'WE DO NOT SEE THE CASE AS A CASE OF TRANSACTION ON CAPIT AL ACCOUNT; IT IS A SIMPLE CASE WHERE TRADING RECEIPTS WERE MORE THAN EXPENDITURE'. TO EMPHASIZE, ACCORDING TO THE SUPREME COURT. THE COURT WAS NOT DEALING WITH A COLLECTION OR A RECEIPT ON CAPITAL ACCOUNT. 4.19 IN THE CASE OF CIT V/S. T.V. SUNDARAM IYEN GAR & SONS LTD., (222 ITR 344), THE SUPREME COURT WAS CONCERNED WITH AN ASSESSEE WHO USED TO COLLECT AMOUNTS IN THE NAME OF DEPOSIT, WHICH REMAINED UNCLAIMED. THE AMOUNTS COLLECTED WERE IN THE NATURE OF SALE CONSIDERATION AS IS EVIDENT FROM THE FACT THAT A CCORDING TO THE SUPREME COURT 'THE DEPOSITS WERE TAKEN IN THE COURSE OF THE TRADE AND ADJUSTMENTS WERE MADE AGAINST THESE DEPOSITS IN THE COURSE OF TRADE'. THE COURT CONSIDERED THE AMOUNT AS RECOVERY OF ADDITIONAL AMOUNT AS INTEGRAL PART OF THE COMMERCIAL TRANSACTION. THUS, HERE AGAIN, THE COURT WAS NOT CONCERNED WITH A CAPITAL RECEIPT. 4.20 AS STATED BEFORE, THE ABOVE CASES HAVE BEEN DULY CONSIDERED IN SOME OF THE CASES RELIED UPON BY THE APPELLANT AND THE COURTS HAVE CONSISTENTLY COME TO A VIEW THAT REM ISSION OF LOAN LIABILITY IS NOT CHARGEABLE TO TAX. I AM BOUND BY THE DECISIONS OF THE JURISDICTIONAL TRIBUNAL AND HIGH COURT AND RESPECTFULLY FOLLOWING THE SAME, I HOLD THAT THE IMPUGNED SUM OF RS. 114.98 C R . IS NOT CHARGEABLE TO TAX U/S. 41 (L) OF THE ACT . THE SUM OF RS. 114.98 C R . IS ALSO NOT CHARGEABLE U/S. 28(IV) OF THE ACT. AS RIGHTLY POINTED OUT BY THE A.R'S, THE SAID SECTION WAS INTRODUCED TO TAX, PERQUISITES ENJOYED BY BUSINESSMEN AND PR OFESSIONALS IN THE COURSE OF CARRYING ON THEIR BUSINESS OR PROF ESSION. A S HELD BY BOMBAY HIGH COURT ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 12 IN THE CASE OF MAHINDRA & MAHINDRA (SUPRA), PROVISIONS OF SECTION 28(IV) CANNOT APPLY IN RELATION TO AN ITEM WHICH IS MEASURABLE IN TERMS OF MONEY; IT IS RESTRICTED IN ITS APPLICATION TO NON CASH OR AN ITEM IN KIND. AS HELD BY THE BANGALORE TRIBUNAL IN THE CA SE OF COMFUND FINANCIAL SERVICE ( I ) LTD VS. DCIT (67 ITD 304), 'SEC. 28(IV) DEALS WITH THE EXTENDED DEFINITION OF BUSINESS INCOME. HOWEVER, FOR THE PURPOSE OF APPLICABILITY OF THE SAME, THE BENEFIT OR PERQUISITE MUS T RELATE TO THE REVENUE ACCOUNT OF THE ASSESSEE.' 11. AGAINST THE ABOVE ORDER OF CIT(A), REVENUE IS IN FURTHER APPEAL BEFORE US. 12. WE HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND FOUND THAT AFTER CONSIDERING VARIOUS JUDICIAL PRONOUNCEMENTS INC LUDING BOMBAY HIGH COURT AND ALSO CONSIDERING THE DECISION RELIED ON BY THE AO , THE CIT(A) HAS REACHED TO THE CONCLUSION THAT NEITHER THE PROVISIONS OF SECTION 41(1) IS APPLICABLE NOR ASSESSEES INCOME WAS LIABLE TO TAX U/S.28(IV) OF THE IT ACT. THE CIT(A ) HAS ALSO CALLED REMAND REPORT AND AFTER CONSIDERING THE SAME AND APPLYING VARIOUS PROPOSITION OF THE LAW, REACHED TO THE CONCLUSION THAT REMISSION OF LOAN WOULD NOT BE CHARGEABLE TO TAX EITHER U/S.41(1) OR U/S.28(IV) OF THE IT ACT. THE DETAILED FINDING S O RECORDED BY CIT(A) HAS NOT BEEN CONTROVERTED BY DR BY BRINING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE ON ACCOUNT OF REMISSION OF LOAN. HOWEVER, CIT(A) HAS CONFIRMED THE REMISSION OF LOAN OF RS.114.98 CRORES WHILE COMPUTING BOOK PROFIT U/S.115JB. WE FOUND THAT THERE WAS A REMISSION OF PRINCIPAL AMOUNT OF LOAN. SIMILAR ISSUE HAS BEEN DEALT IN THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - SHREE CEMENT LTD., (ITA NO. 503/JP/2012) DATED 27 TH JANUARY 2014 (JP) ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 13 SHREE CEMENT LTD., (ITA NO.614/JP/2010) DATED 9 TH SEPTEMBER 2011(JP) . NILGIRI TEA ESTATE LTD., (ITA NO.37/COCH/2014) DATED 6 TH JUNE 2014 (COCHIN) NILGIRI TEA ESTATE LTD., (ITA NO.377/COCH/2014) DATED 29 TH FEBRUARY 2012 (COCHIN) HARRISONS MALAYALAM LTD., 32 SOT 497 (COCH) M/S. DELHI GYMKHANA CLUM LIMITED (ITA NO.3585/DEL/2006) DATED 30 TH SEPTEMBER 2009 APPROVED BY DELHI HIGH COURT 339 ITR 525 M/S. SHIVALIK VENTURE PVT. LTD., (ITA NO.2008/MUM/2012) DATED 19 AUGUST 20 15 L.H.SUGAR FACTORY LTD., (46 CCH 354 (2016)(LUCKNOW TRIB) BINANI INDUSTRIES LTD., (2016)46 CCH212)(KOL TRIB) M/S. KARNATAKA SOAPS & DETERGENTS LTD., (ITA NO.257 OF 2007) DATED 13 OCTOBER 2014 (KAR HC) 13. IN THE CASE OF NILGIRI TEA ESTATE LTD., (ITA NO.3 7/COCH/2014) DATED 6 TH JUNE 2014, COCHIN BENCH OF TRIBUNAL HELD AS UNDER: - 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THERE IS NO DISPUTE BETWEEN THE PARTIES THAT THE IMPUGNED AGRICULTURAL LAND IS NOT A CAPITAL ASSET IN TERMS OF SEC. 2(14)(III) OF THE ACT, I.E., THE SAME IS NOT LOCATED WITHIN THE MUNICIPAL LIMITS OR WITHIN THE NOTIFIED LIMITS. AS SUBMITTED BY THE LD. AR, WE NOTICE THAT, AN IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE CO - ORDINATE BENCH OF THE ITAT I N THE ASSESSEES OWN CASE RELATING TO THE ASSESSMENT YEAR 2007 - 08 (REFERRED SUPRA). FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE OPERATING PORTION OF THE ABOVE SAID ORDER PASSED BY THE TRIBUNAL. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. THE REVENUES STAND IS THAT PROFIT OR LOSS ON THE DISPOSAL OF AN ASSET IS TO BE DULY INCORPORATED IN THE PROFIT & LOSS ACCOUNT OF A COMPANY PREPARED IN ACCORDANCE WITH PARTS II & III OF SCHEDULE ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 14 VI TO THE COMPANIES ACT, 1956, THE NET PROFIT PER WHICH IS TO BE ADOPTED BY IT FOR COMPUTING THE `BOOK PROFIT UNDER THE MAT PROVISIONS, INCLUDING S. 115JB. AS SUCH, THERE IS NO BASIS FOR EXCLUDING THE PROFIT DERIVED ON THE SALE OF ITS AGRICULTURAL LAND BY THE ASSESSEE. FURTHER, THERE IS NO QUESTION OF T HE SAME BEING ELIGIBLE FOR DEDUCTION ON ACCOUNT OF SEC. 10 OF THE ACT, WHICH MAKES NO REFERENCE TO THE SAID INCOME. THE ASSESSEE, ON THE OTHER HAND, RELIES ON THE DECISION BY THE TRIBUNAL IN THE CASE OF HARRISONS MALAYALAM LTD. VS. ACIT (SUPRA), PER WHICH THE SAID PROFIT HAS BEEN HELD AS NOT LIABLE TO BOOK PROFIT TAX U/S. 115JB. THE REVENUE, HOWEVER, PREFERS WITH ITS VIEW AS THE MATTER HAS BEEN, AS STATED, CARRIED BY IT IN APPEAL BEFORE THE HONBLE HIGH COURT. THE TRIBUNAL HAS, IN RENDERING ITS SAID DECISIO N, RELIED ON THE DECISIONS BY THE APEX COURT IN THE CASE OF SINGHAI RAKESH KUMAR V. UNION OF INDIA (2001) 247 ITR 150 (SC) AND CIT V. ALL INDIA TEA AND TRADING CO. LTD. (1996) 219 ITR 544 (SC), HOLDING THAT THE INCOME ARISING ON THE TRANSFER OF AGRICULTURA L LAND IS NOT ELIGIBLE TO CAPITAL GAINS TAX, BEING IN THE NATURE OF AGRICULTURAL INCOME. FIRSTLY, AS SUCH, THERE IS COMPLETE PARITY OF FACTS, SO THAT WE FIND NO REASON TO TAKE A DIFFERENT VIEW OF THE MATTER. SECONDLY, THE REVENUES OBJECTION IS TECHNICAL I N NATURE INASMUCH IT CONCEDES THAT THE INCOME IS OTHERWISE NOT CHARGEABLE TO TAX UNDER THE REGULAR PROVISIONS OF THE ACT. THE PROVISIONS OF CHAPTER XII - B OF THE ACT DO NOT, IN OUR VIEW, OPERATE TO EXTEND THE SCOPE OF `TOTAL INCOME PER SECTION 5 ON WHICH T HE CHARGE TO TAX U/S. 4 IS ATTRACTED, BUT IS ONLY TOWARD PROVIDING AN ALTERNATIVE BASIS FOR COMPUTING THE SAME. REFERENCE BY THE LD. CIT(A) TO THE CIRCULAR NO. 550 BY THE BOARD IN THIS REGARD IS IN OUR VIEW APPOSITE; THE RECEIPT BEING ADMITTEDLY A CAPITAL RECEIPT. WE THEREFORE FOLLOWING THE DECISION BY THE TRIBUNAL IN THE CASE OF HARRISONS MALAYALAM LTD. VS. ACIT (SUPRA), DELETE THE INCLUSION OF PROFIT OF RS. 23.69 LAKHS ON ACCOUNT OF SALE OF AGRICULTURAL LAND, ADMITTEDLY NOT A CAPITAL ASSET U/S. 2(14), IN THE COMPUTATION OF BOOK PROFIT U/S. 115JB OF THE ACT. WE DECIDE ACCORDINGLY. 7. THERE SHOULD NOT BE ANY DISPUTE THAT THE PROFIT ARISING ON SALE OF AGRICULTURAL LAND, WHICH DOES NOT FALL IN THE CATEGORY OF CAPITAL ASSET AS DEFINED UNDER SEC. 2(14) OF TH E ACT DOES NOT COME UNDER THE PURVIEW OF THE INCOME TAX ACT AT ALL. FOR EXAMPLE, THE PROFIT ARISING ON SALE OF PERSONAL EFFECTS IS NOT EXIGIBLE TO INCOME TAX ACT. IN THE SIMILAR MANNER, THE PROFIT ARISING ON SALE OF AGRICULTURAL LAND, WHICH IS NOT A CAPI TAL ASSET, IS ALSO NOT EXIGIBLE TO INCOME TAX. HENCE, IN OUR VIEW, AN ITEM OF INCOME WHICH DOES COME UNDER THE PURVIEW OF INCOME TAX CANNOT BE SUBJECTED TO TAX UNDER ANY OF THE PROVISIONS OF THE ACT. HENCE, THE TRIBUNAL, IN THE ASSESSEES OWN CASE REFERRED ABOVE, HAS EXPRESSED THE FOLLOWING VIEW: - THE PROVISIONS OF CHAPTER XII - B OF THE ACT DO NOT, IN OUR VIEW, OPERATE TO EXTEND THE SCOPE OF `TOTAL INCOME PER SECTION 5 ON WHICH THE CHARGE TO TAX U/S. 4 IS ATTRACTED, BUT IS ONLY TOWARD PROVIDING AN ALTERNA TIVE BASIS FOR COMPUTING THE SAME. ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 15 ACCORDINGLY, WE ARE OF THE VIEW THAT THE PROFIT FROM SALE OF AGRICULTURAL LAND, WHICH IS NOT A CAPITAL ASSET, CANNOT BE INCLUDED FOR THE PURPOSE OF COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. ACCORDINGLY, WE UPHOLD T HE DECISION TAKEN BY LD CIT(A) . 14. IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENTS, WE RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR DECIDING AFRESH AFTER APPLYING THE PROPOSITION OF LAW LAID DOWN IN ABOVE JUDICIAL PRONOUNCEMENTS TO THE FACTS OF THE INST ANCE CASE. WE DIRECT ACCORDINGLY. 15 . ASSESSEE IS ALSO AGGRIEVED FOR CHARGING OF INTEREST U/S.234 B WHERE INCOME IS ASSESSED U/S.115JB OF THE ACT. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT EXACTLY SIMILAR ISSUE HAS BEEN DEALT IN THE FOLLOWING JUDI CIAL PRONOUNCEMENTS. ALOK INDUSTRIES LTD., (ITA NO.8340/MUM/2010) DATED 20 TH FEBRUARY 2015 ROCKLINE DEVELOPERS PVT. LTD., (ITA NO.6382/MUM/2013) DATED 21 ST FEBRUARY 2014(MUM) CHARBHUJA INDUSTRIES PVT. LTD., (ITA NO.6902/M/2012) DATED 24 TH JANUARY 2014 (MUM ) 1 6 . IN THE CASE OF ALOK INDUSTRIES LTD., IN ITA NO.8340/MUM/2010 VIDE ORDER DATED 20/02/2015, THE TRIBUNAL HELD AS UNDER: - 13. GROUNDS NO.17 & 18 RELATE TO LEVY OF INTEREST U/S 234B OF THE ACT. THE ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT AT THE RE LEVANT POINT OF TIME THERE ARE VARIOUS DECISIONS INCLUDING THE DECISION OF HON'BLE SUPREME COURT IN CASE OF 'CIT VS KWALITY BISCUITS LTD.' 284 ITR 434 WHEREIN IT HAD BEEN HELD THAT NO INTEREST U/S 234B AND 234C WAS LEVIABLE ONCE THE INCOME TAX IS DETERMINE D U/S 115JB. ASSESSEE FURTHER CONTENDED THAT THE NON - PAYMENT OF ADVANCE TAX ON THE BOOK PROFIT WAS UNDER BONAFIDE BELIEF OF THE ASSESSEE AND THEREFORE, THE INTEREST U/S 234B AND 234C CANNOT BE CHARGED. ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 16 14. THE LD. CIT(A), HOWEVER, DID NOT ACCEPT THE CONTEN TION OF THE ASSESSEE AND HELD THAT LEVY OF INTEREST U/S 234B AND 234C WAS MANDATORY AND CONSEQUENTIAL AND HENCE CONFIRMED THE SAME. 15. BEFORE US, AT THE OUTSET, THE LD. AR OF THE ASSESSEE HAS RELIED UPON THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUN AL IN THE CASE OF 'CHARBHUJA INDUSTRIES PVT. LTD. VS. ACIT' ITA NOS.6901 & 6902/M/2012 ORDER DATED 24.01.2014, WHEREIN THE CO - ORDINATE BENCH OF THE TRIBUNAL, WHILE ADJUDICATING THE IDENTICAL ISSUE HAS OBSERVED AS UNDER: '5. WE HAVE CONSIDERED THE RIVAL SUB MISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE REGARDING THE FACT THAT DURING THE ASSESSMENT YEARS UNDER CONSIDERATION THE SETTLED LAW ON THE POINT WAS THE DECISION OF THE HON'BLE SUPREME COURT IN CASE OF CIT VS KWALITY BISCUITS LTD. 284 ITR 434 AS WELL AS A NUMBER OF OTHER DECISIONS INCLUDING DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT IN CASE OF SNOWCEM INDIA LTD. VS DCIT 313 ITR 170 AND IN CASE OF CIT VS NATURAL GEMS LTD. 327 ITR 269 WHEREIN IT HAS BEEN HELD THAT NO ADVANCE MAT W AS PAYABLE BY THE COMPANY. THEREFORE, THE ASSESSEE HAD NO REASON TO BELIEF OR FORESEE A SUBSEQUENT DECISION FASTENING THE LIABILITY OF PAYMENT OF ADVANCE TAX. EVEN OTHERWISE THE DECISION IN CASE OF JCIT VS ROLTA INDIA LTD. (SUPRA) IS A SUBSEQUENT DECISION AND THEREFORE, THE IMPOSSIBILITIES AT THE RELEVANT POINT OF TIME CANNOT BE THRASHED UPON THE ASSESSEE. IN THE FACTS AND CIRCUMSTANCES AS DISCUSSED ABOVE NO FAULT CAN BE FOUND WITH THE ASSESSEE IN NOT DEPOSITING THE ADVANCE TAX OF MAT IN VIEW OF THE DECISIO N OF THE HON'BLE SUPREME COURT AS WELL AS VARIOUS DECISIONS OF THE HON'BLE HIGH COURT. THE ASSESSEE HAD THE BONAFIDE REASON TO BELIEVE THAT ADVANCE TAX WAS NOT PAYABLE IN RESPECT OF MAT U/S 115JB AS IT WAS SETTLED LAW LAID DOWN BY THE HON'BLE SUPREME COURT AND HON'BLE HIGH COURT WHICH HOLD GOOD TILL THE SUBSEQUENT DECISION OF HON'BLE SUPREME COURT IN CASE OF JCIT VS ROLTA INDIA LTD. (SUPRA). THEREFORE, PRIOR TO THE DECISION OF HON'BLE SUPREME COURT IN CASE OF JCIT VS ROLTA INDIA LTD. (SUPRA) SETTLED PROPOSI TION OF THE LAW ON THE POINT WAS THAT NO ADVANCE TAX WAS PAYABLE ON MAT COMPUTED U/S 115JB AND ACCORDINGLY, THE INTEREST U/S 234B AND 234C CANNOT BE LEVIED FOR NON - DEPOSIT OF ADVANCE TAX ON MAT FOR THE YEAR UNDER CONSIDERATION. HENCE, WE DELETE THE LEVY OF INTEREST U/S 234B AND 234C IN THIS CASE.' 16. BEING IN AGREEMENT WITH THE ABOVE FINDINGS OF THE CO - ORDINATE BENCH, THIS ISSUE IS DECIDED ACCORDINGLY AND THE INTEREST LEVIED U/S 234B/234C IS ACCORDINGLY ORDERED TO BE DELETED. 1 7 . THE FACTS AND CIRCUMSTA NCES DURING THE YEAR UNDER CONSIDERATION ARE PARIMETERIA , THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE CO - ORDINATE BENCH AS DISCUSSED ABOVE, WE DIRECT THE AO TO DELETE THE INTEREST CHARGED U/S.234B OF THE IT ACT. ITA NO. 1522/MUM/2009 & 1685/MUM/2009 M/S. SICOM LTD., 17 18. IN THE RESULT, APPEAL OF REVEN UE IS DISMISSED WHEREAS APPEAL OF THE ASSESSEE IS ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 06 / 12 /2016 S D/ - ( AMARJIT SINGH ) S D/ - ( R.C.SHARMA ) JUDIC IAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 06 / 12 /201 6 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//