ITO, New Delhi V. M/s. Hindustan Fibers Ltd., New Delhi

ITA 257/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7553 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 28-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 13-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A K SAROHA
• Keywords: Capital asset; Question of law; Onus to prove
• Section: 139

Judgement Text

1 ITA NO. 257/DEL/2014 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEM BER AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO.-257/DEL/2014 (ASSESSM ENT YEAR-2009-10) ITO WARD-12(4), C.R. BUILDING NEW DELHI (APPELLANT) VS HINDUSTAN FIBERS LTD. 604, SETH BHAWAN 7, RAJENDRA PLACE NEW DELHI AAACH0070J (RESPONDENT) APPELLANT BY SH. VED JAIN, CA RESPONDENT BY SH. A. K. SAROHA, CIT DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED AGAINST THE ORDER DATED 20/12/ 2011 PASSED BY CIT (A) XI, NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS FOLLOWS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.13, 28,59,000/- MADE ON ACCOUNT OF WAIVER OF LOAN FROM IDBI UNDER O NE TIME SETTLEMENT U/S 28(IV) OF THE I.T ACT, 1961? DATE OF HEARING 28.03.2016 DATE OF PRONOUNCEMENT 30.05.2016 2 ITA NO. 257/DEL/2014 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT (A) HAS ERRED IN RELYING UPON THE DECISION OF M/S T OSHA INTERNATIONAL LTD, WHILE ALLOWING THE RELIEF WITHOU T CONSIDERING THAT THE ISSUE INVOLVED IN THIS CASE WAS CESSATION OF LIABILITY U/S 41(1) OF THE I.T. ACT, WHEREAS IN THE PRESENT CASE ADDITION WAS MADE U/S 28(IV) OF THE I.T. ACT. 3. THE RETURN OF INCOME DECLARING AN INCOME OF RS.5 ,99,410/- WAS FILED BY THE ASSESSEE ON 25/09/2009. THEREAFTER THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE A.O MADE AN ADDITION OF RS.13,28,59,000/- U/S 28 (IV) OF THE ACT TREATING T HE WAIVER OF TERM LOAN BY IDBI BANK, ON ONE TIME SETTLEMENT AS THE I NCOME OF THE ASSESSEE. THE ASSESSEE WENT IN APPEAL BEFORE THE C IT (A). THE CIT(A) DELETED THE SAID ADDITION STATING THAT THE LOAN AVA ILED FROM THE IDBI IS A TERM LOAN AND NOT A WORKING CAPITAL LOAN AND T HUS THE CASE OF THE ASSESSEE COMPANY SQUARELY COVERED BY THE DECISI ON OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. TOSHA INTER NATIONAL LTD. 331 ITR 440. 4. THE LD. DR SUBMITTED THAT THE CASE OF TOSHA INTE RNATIONAL IS NOT APPLICABLE AND IN FACT HAS BEEN CONSIDERED IN THE C ASE OF ROLLATAINERS LTD VS. CIT (ITA NO. 127 OF 2011 DECIDED ON 30.08.2 011) PASSED BY HONBLE DELHI HIGH COURT. THE HONBLE DELHI HIGH C OURT HELD THAT UNDER ONE TIME SETTLEMENT SCHEME THE BANKS AND THE INSTITUTIONS REQUIRED THE ASSESSEE TO PAY CERTAIN PERCENTAGE OF THE AMOUNT TOWARDS THE PRINCIPAL AND WAIVER THE ENTIRE INTERES T AMOUNT. WHETHER WAIVER OF THE PRINCIPAL AMOUNT CREDITED TO THE CAPITAL 3 ITA NO. 257/DEL/2014 RESERVE ACCOUNT CONSTITUTED INCOME WAS CONSIDERED I N THE SAID CASE AND THE COURT CAME TO THE CONCLUSION THAT THE AMOUN T IS NOT COVERED BY THE PROVISION CONTAINED IN SECTION 41(1). THUS, THE LD. DR SUBMITTED THAT THE WORKING CAPITAL CANNOT AMOUNT TO TERM LOAN. THE LD. DR FURTHER POINTED OUT THAT THE ASSESSEE HA S NOT RIGHTLY DISCHARGED ITS BURDEN OF PROOF. 5. HOWEVER, THE LD. AR REFUTED THE SAME. THE LD. A R SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESS EE HAS GONE FOR ONE TIME SETTLEMENT WITH IDBI BANK. UNDER THE SAID SETTLEMENT, THE OUTSTANDING LIABILITY OF THE TERM LOAN FROM IDB I BANK WAS SETTLED AT RS.538.86 LAKHS FROM RS.1867.16 LAKHS GI VING THE ASSESSEE A TOTAL BENEFIT OF RS.1328.59 LAKHS IN THE YEAR UND ER CONSIDERATION. THE ASSESSEE COMPANY HAS GOT ITS TERM LOAN WAIVED F ROM IDBI BANK WHICH WAS TAKEN INTO ACCOUNT BY CIT (A) IN HIS ORDE R. THE LD. AR SUBMITTED THAT THE FACTUAL ASPECTS AS WELL AS THE L EGAL ASPECT ARE SIMILAR TO THAT OF THE CASE OF TOSHA INTERNATIONAL (SUPRA). THEREFORE, THE ADDITIONS WERE RIGHTLY DELETED BY THE CIT (A). 6. WE HAVE PERUSED ALL THE RECORDS AND HEARD BOTH T HE PARTIES. THE FACTUAL ASPECTS ARE SIMILAR TO THE CASE OF TOSH A INTERNATIONAL (SUPRA). IN THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ROLLATAINERS LTD., NOTICED, THE ASSESSEE THEREIN REVISED THE ORIGINAL CLAIM, BY FILING BEFORE THE ASSESSING OFFICER, A RE VISED COMPUTATION OF INCOME, BY REDUCING THE PRINCIPAL AMOUNT OF LOANS ( TERM LOANS AS WELL AS WORKING CAPITAL LOANS) WAIVED BY THE BANKS, FROM ITS TAXABLE 4 ITA NO. 257/DEL/2014 INCOME. THE ASSESSING OFFICER DENIED THE SAID REQUE ST ON THE GROUND THAT REVISION OF CLAIM MADE IN THE ORIGINAL RETURN OF INCOME COULD NOT BE ENTERTAINED OTHERWISE THAN BY WAY OF REVISED RET URN, WHICH WAS REQUIRED TO BE FILED WITHIN THE TIME LIMIT PRESCRIB ED UNDER SECTION 139 (5) OF THE ACT. BUT IN THE PRESENT CASE, LOAN W AIVER WAS CLAIMED IN THE ORIGINAL RETURN OF INCOME BY THE ASSESSEE. THE ONE TIME SETTLEMENT (OTS AMOUNT) HAS BEEN PAID OUT OF FRESH INDUCTION OF FUNDS BY PROMOTERS AS DIRECTED IN THE BIFR ORDER. 7. IN THE CASE OF TOSHA INTERNATIONAL (SUPRA), IT W AS HELD AS FOLLOWS: 3. THE REVENUE WENT IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) W ITH REGARD TO THE DELETION OF THE SAID SUM OF RS 10.47 CRORES. WE NOTE THAT THE TRIBUNAL HAS EXAMINED THE CASE IN DETAIL AND PA RTICULARLY FROM THE STANDPOINT OF THE PROVISIONS OF SECTION 41 (1) OF THE SAID ACT. THE TRIBUNAL HAS OBSERVED AS UNDER:- 'AS PER OUR CONSIDERED VIEW, FOR ATTRACTING THE PRO VISIONS OF SECTION 41 (1), THE FIRST REQUISITE CONDITION TO BE SATISFIED IS THAT THE ASSESSEE SHOULD HAVE GOT DEDUCTION OR BENE FIT OF ALLOWANCE IN RESPECT OF LOSS, EXPENDITURE OR TRADIN G LIABILITY INCURRED BY IT AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR, THE ASSESSEE SHOULD HAVE RECEIVED ANY AMOUNT IN RES PECT OF SUCH LOSS, EXPENDITURE OR TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF. THE REMISSION WOULD BECOME 5 ITA NO. 257/DEL/2014 INCOME ONLY IF THE ASSESSEE HAS CLAIMED DEDUCTION I N RESPECT OF EXPENDITURE OR TRADING LIABILITY. IN MAHINDRA & MAHINDRA LTD. VS. CIT, HON BLE HIGH COURT OF BOMBAY 261 ITR 501, HELD THAT NO ALLOWANCE OR DEDUCTION HAVING BEEN ALL OWED IN RESPECT OF LOAN TAKEN BY ASSESSEE FOR PURCHASE OF C APITAL ASSETS, SECTION 41 (1) WAS NOT ATTRACTED TO REMISSION OF PRINCIPAL AMOUNT OF LOAN. IN THE INSTANT CASE, THE ASSESSEE HAS NOT GOT ANY DEDUCTION ON ACCOUNT OF ACQUISITION OF CAPITAL ASSETS AS THE SAME HAS BEEN REFLECTED IN THE BALANC E SHEET AND NOT IN THE P&L ACCOUNT, AND ALSO THE REMISSION OF THE PRINCIPAL AMOUNT OF LOAN SO OBTAINED FROM THE BANK AND FINANCIAL INSTITUTION HAD NOT BEEN CLAIMED AS EXPEN DITURE OR TRADING LIABILITY IN ANY OF THE EARLIER PREVIOUS YE AR. SO FAR AS WAIVER OF INTEREST IS CONCERNED, THE ASSESSEE COMPA NY ITSELF HAS TREATED THE SAME EITHER AS INCOME OR HAS NOT CL AIMED THE SAME AS EXPENDITURE IN THE COMPUTATION OF INCOME FI LED BEFORE THE LOWER AUTHORITIES.' 4. WE SEE NO REASON TO INTERFERE WITH THE CONCLUSIO NS OF THE TRIBUNAL AS THE SAME HAVE BEEN RENDERED ON A CORREC T APPRECIATION OF LAW. THE PRINCIPLES ENUNCIATED IN MAHINDRA & MAHINDRA LIMITED V. CIT : 261 ITR 501(BOM) ARE FULLY APPLICABLE AND WE SEE NO REASON TO TAKE A DIFFERENT VIEW. 6 ITA NO. 257/DEL/2014 5. CONSEQUENTLY, NO SUBSTANTIAL QUESTION OF LAW ARI SES FOR OUR CONSIDERATION. THE APPEAL IS DISMISSED. THE CIT (A) HAS RIGHTLY APPLIED THE RATIO LAID DOWN IN TOSHA INTERNATIONAL (SUPRA) TO THE FACTS OF THIS CASE AND ALLOWED THE APPEAL OF THE ASSESSEE. HENCE, WE DO NOT INTERFERE IN THI S ORDER. 8. IN RESULT, THE APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30 TH OF MAY, 2016. SD/- SD/- (J. SUDHAKAR REDDY) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 30/05/2016 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT R EGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 28/03/2016 PS 7 ITA NO. 257/DEL/2014 2. DRAFT PLACED BEFORE AUTHOR 28/03/2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 31.05.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 3 1 .05.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.