The ITO, Ward-2(1)(4), Ahmedabad V. Medical Technologies Pvt. Ltd., Ahmedabad

ITA 3328/AHD/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0113 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 09-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P B PARMAR
• Keywords: Capital asset; Business income; Depreciation; Capital receipt
• Section: 143(3); 36 (1) (iii); 28

Judgement Text

ITA NO.: 3328/AHD/16 ASSESSMENT YEAR: 2013-14 PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD [CORAM: JUSTICE P P BHATT (PRESIDENT) AND PRAMOD KU MAR (VICE PRESIDENT)] ITA NO.: 3328/AHD/16 ASSESSMENT YEAR: 2013-14 INCOME TAX OFFICER .APPELLANT WARD 2 (1)(4), AHMEDABAD VS MEDICAL TECHNOLOGIES LIMITED ..........RES PONDENT (NOW MERGED WITH PINTOPS ENTERPRISES PVT LTD) SYDNEY HOUSE, PREMCHANDNAGAR ROAD, BODAKDEV, AHMEDABAD 380054 [PAN : AABCM 0639 H] APPEARANCES BY MUDIT NAGPAL FOR THE APPELLANT TUSHAR HEMANI & PB PARMAR FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JUNE 03, 2019 DATE OF PRONOUNCEMENT : JUNE 03, 2019 O R D E R PER BENCH : 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER APP ELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 18 TH OCTOBER 2016, IN THE MATTER OF ASSESSMENT UNDER SE CTION 143(3) OF THE INCOME TAX ACT, 1961, PASSED BY THE LEARNED COMMISS IONER OF INCOME-TAX (APPEALS) FOR THE ASSESSMENT YEAR 2013-14. 2. GRIEVANCE OF THE APPELLANT IS THAT THE CIT(A) H AS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS 4,42,95,650 MADE ON ACCOUNT OF C ESSATION OF LIABILITY UNDER SECTION 41(1) OF THE ACT AND, AS AN ARGUMENT IN SUPPORT OF THIS GRIEVANCE, THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE ASSES SEE COMPANY HAD FAILED TO PROVE THAT THE LOAN OBTAINED FROM M/S MATRIX LOGISTICS PVT LTD WAS OR THE PURPOSE OF ACQUIRING CAPITAL ASSETS. 3. THE ISSUE IN APPEAL LIES WITHIN A VERY NARROW CO MPASS OF MATERIAL FACTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER NOTICED THAT THE ASSESSEE HAD CREDITED RS 4,42,95,650 TO THE PROFIT AND LOSS ACCO UNT BEING THE INTEREST FREE UNSECURED LOAN IT HAD OBTAINED FROM MATRIX LOGISTICS PVT LTD IN PR EVIOUS YEAR, THE LIABILITY OF WHICH CEASED TO EXIST ON ACCOUNT OF WINDING OFF OF MATRIX LOGIST ICS PVT LTD BY THE ORDER OF HONBLE HIGH COURT OF GUJARAT. HE ALSO NOTED CONTENTION OF THE ASSESSEE THAT AS IT WAS A CAPITAL RECEIPT, IT ITA NO.: 3328/AHD/16 ASSESSMENT YEAR: 2013-14 PAGE 2 OF 11 COULD NOT BE BROUGHT TO TAX. HE WAS, HOWEVER, OF TH E VIEW THAT THIS IS A CESSATION OF LIABILITY SQUARELY COVERED BY THE PROVISIONS OF SECTION 41(1) OF THE ACT. THE ARGUMENTS PUT FORTH BY THE ASSESSEE REGARDING IN THIS REGARD AND IN RESPON SE TO SHOW CAUSE NOTICE, REQUIRING THE ASSESSEE AS TO WHY THE SAID RECEIPT NOT BE BROUGHT TO TAX, WERE REJECTED BY THE ASSESSING OFFICER. HE WAS OF THE VIEW THAT THE CREDIT BEING ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT SHOWS ITS REVENUE CHARACTER, AND THAT, IN ANY OTHER CASE, IT COULD HAVE BEEN DIRECTLY CREDITED TO CAPITAL RESERVE. THE AO ALSO NOTICED THAT THE MONIE S BORROWED FROM MATRIX LOGISTICS WERE USED IN BUYING SHARES WHICH SHOWS ITS ADVANTAGE IN THE REVENUE FIELD. THE AO FURTHER NOTED THAT IT IS NOT PROVED THAT THE MONIES BORROWED WERE USED FOR ACQUISITION OF CAPITAL ASSETS, AND AS SUCH, IT COULD NOT BE TREATED AS CAPITAL RECEIPT . HE THUS PROCEEDED TO BRING THE AMOUNT OF RS 4,42,95,650 TO TAX. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO DELETED THE SAID ADDITION AND OBSERVED AS FOLLOWS: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. THE AO HAS MAD E THE ADDITION OF RS.4,42,95,650/- BEING THE AMOUNT OF UNSECURED INTE REST FREE LOANS TAKEN FROM M/S. MATRIX LOGISTICS PVT. LTD. INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT FOR THE REASON THAT THE SAME HAS BEEN WRITTEN OFF IN THE PR OFIT AND LOSS ACCOUNT BUT NOT OFFERED THE SAME FOR TAXATION IN THE COMPUTATION OF INCOME. 2.4. IT HAS BEEN NOTICED THAT THE APPELLANT COMP ANY HAS THE MAIN OBJECTS FOR CARRYING OUT BUSINESS OF PROVIDING TECHNOLOGICAL SU PPORT SERVICES AND THE BUSINESS OF MANUFACTURE AND TRADING OF MEDICAL EQUIPMENTS BUT F ROM A.YRS.2009-10 TO 2013-14 ONWARDS THE APPELLANT DID NOT HAVE ANY BUSINESS ACT IVITIES AND THEREFORE NO BUSINESS INCOME HAD BEEN OFFERED FOR TAXATION IN THE RETURNS OF INCOME FILED FOR THE RESPECTIVE YEARS. DURING THE YEAR THE APPELLANT HAD SHOWN THE INCOME FROM DIVIDEND AT RS.93,06,240/- AND INTEREST INCOME ON FDRS WITH BAN K OF RS. 15,15,954/- WHICH WERE TAXABLE UNDER THE HEAD OF INCOME FROM OTHER SOURCES . THE AO ALLEGED THAT THE APPELLANT HAS NOT STARTED ITS REGULAR BUSINESS MENT IONED IN ITS OBJECTS AS PER THE MEMORANDUM OF ASSOCIATION BUT IT WAS ENGAGED IN BUS INESS OF PURCHASE AND SALE OF SHARES OF THE GROUP COMPANY AND INVESTMENT IN MUTUA L FUNDS. THEREFORE THE BUSINESS OF THE ASSESSEE WAS TO BE CONSIDERED AS REGULAR BUS INESS OF SHARE TRADING AND TILL THE DATE THE ASSESSEE HAS NOT CONDUCTED ANY OTHER BUSIN ESS. THE APPELLANT HAS THE INVESTMENT IN SHARES AND THEREFORE THE INVESTMENT I N SHARES CAN ONLY BE TREATED AS STOCK IN TRADE AND ANY AMOUNT WHICH IS OBTAINED AS UNSECURED LOANS USED FOR PURCHASES OF SHARES WAS NOT A CAPITAL RECEIPT BUT W AS TO BE TREATED AS REVENUE RECEIPTS. THE AO MADE THE ADDITION ON THE PLEA THAT SINCE THE AMOUNT WRITTEN OFF WHICH WAS NOT PAYABLE TO MATRIX LOGISTICS PVT. LTD. HAS BEEN CREDITED IN THE PROFIT AND LOSS ACCOUNT THEREFORE IT WAS CLEARLY A TAXABLE ITEM IN THE HANDS OF THE APPELLANT. AS PER THE AO THIS LOAN RECEIVED FROM THE AFORESAID PARTY WAS USED FOR THE PURPOSE OF ITS REGULAR BUSINESS OF SHARE TRADING AND THEREFORE IT WAS A TRADING LIABILITY ARID NOT A CAPITAL LIABILITY'' HOWEVER, THEREAFTER THE AO HOLD THAT EVEN IF HE HOLD THAT SECTION 41(1) OF THE ACT IS NOT APPLICABLE. SECTION 28(IV) IS CLEARLY APPLICABLE. AND IF SECTION 28(IV] OF THE I.T. ACT IS NOT APPLICABLE THEN SECTI ON 41(1) OF THE ACT IS CLEARLY APPLICABLE. THE DETAILED DISCUSSION IN THIS REGARD IS MADE IN PARA-3.2 TO 3.9 OF THE ASSESSMENT ORDER. 2.5. ON THE OTHER SIDE, THE APPELLANT CLAIMED THAT THE SAID AMOUNT WAS THE CAPITAL RECEIPTS. IT HAS OBJECTED TO THE AO'S OBSERVATION T HAT THE APPELLANT DID NOT CARRY OUT ITA NO.: 3328/AHD/16 ASSESSMENT YEAR: 2013-14 PAGE 3 OF 11 ANY BUSINESS ACTIVITIES AS PER THE MAIN OBJECTS OF THE MEMORANDUM OF ASSOCIATION AND IN SUPPORT THE DETAILS OF ITS NATURE OF INCOME OFFE RED IN THE PRECEDING YEARS SUBMITTED AND THE SAME ARE REPRODUCED AS UNDER:- SUMMARY OF BUSINESS TRANSACTIONS AS PER PROFIT AND LOSS A/C. RUPEES F.Y. CONSUMPTION / PURCHASE OF GOODS SALE OF GOODS INCOME FROM CONSULTING FEES 2000-01 190,581,976 241,981,841 2001-02 269,062,228 238,043,115 2002-03 55,783,696 66,210,287 2003-04 1,608,659 2,248,668 2004-05 1,203,152 1,565,360 2005-06 467,491 415,800 10,494,200 2006-07 122,480 143,640 2007-08 64,804 68,040 2008-09 2009-10 2010-11 __ 2011-12 2012-13 _ SUMMARY OF OTHER INCOME F. Y. DIVIDEND INTEREST PROFIT / LOSS ON SALE OF INVESTMENT 2000-01 49,401 10,324,006 171,705 2001-02 300 2,458,183 2002-03 303 113,797 2003-04 350 841 2004-05 600 2005-06 95,642 2,352,854 2006-07 4,653,720 13,956 2007-08 4,690,400 189,002 -324207 2008-09 9,307,140 __ 2009-10 2,482,564 533,026 1 ,675,000 2010-11 9,006,240 -4434600 2011-12 9,306,240 159,006 2012-13 9,306,240 1,515,954 2.6. THE ABOVE NATURE OF INCOME WAS VERIFIABLE FROM THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET SUBMITTED BY THE APPELLANT TO THE DEP ARTMENT. AS CAN BE NOTICED FROM THE ABOVE THAT THE APPELLANT DID NOT HAVE ANY BUSIN ESS INCOME FROM A.Y. 2009-10 ONWARDS TILL THE YEAR UNDER CONSIDERATION BECAUSE O F ABSENCE OF ANY BUSINESS ACTIVITY CARRIED OUT WITHIN THE MEANING OF SECTION 28 OF THE ACT SO THERE IS NO QUESTION OF COMPUTATION OF INCOME FROM BUSINESS AND ACCORDINGLY THE TAXATION OF THE UNSECURED LOAN WRITTEN OFF UNDER THE HEAD OF INCOME FROM BUSI NESS IS NOT CORRECT. ITA NO.: 3328/AHD/16 ASSESSMENT YEAR: 2013-14 PAGE 4 OF 11 2.7. THE AO'S OBSERVATION IN THIS REGARD THAT THE A PPELLANT HAD THE SHARE TRADING BUSINESS WAS FACTUALLY INCORRECT. IT HAS BEEN SUBMI TTED THAT IN APPELLANT'S OWN CASE IN THE PRECEDING YEARS, THE SCRUTINY ASSESSMENT U/S.14 3(3) HAVE BEEN FINALIZED AND THE BUSINESS ACTIVITY OF THE APPELLANT AS PROVIDING TEC HNOLOGICAL SUPPORT SERVICES AND MANUFACTURING AND TRADING OF MEDICAL EQUIPMENTS HAV E BEEN ACCEPTED WITHOUT ANY DISPUTE. 2.8. THE APPELLANT ALSO OBJECTED TO THE INVOCATION OF THE PROVISIONS OF SECTION 41(1) OF THE ACT AS NO CONDITION OF THE SAID SECTION HAS BEE N COMPLIED WITH BEFORE APPLYING THE SAME. IT HAS BEEN SUBMITTED THAT THE PROVISIONS OF SECTION 41 (1) CONIES INTO PLAY WHEN THE DEDUCTION IN RESPECT OF SUCH LIABILITY HAS BEEN ALLOWED AS A TRADING LOSS, EXPENDITURE OR TRADING LIABILITY IN EARLIER YEARS A S AGAINST THE INCOME OF THE APPELLANT. SINCE IN THE INSTANT CASE NO SUCH DEDUCTION OF THE UNSECURED LOANS FROM MATRIX LOGISTICS PVT. LTD. HAS BEEN ALLOWED, THEREFORE, TH E CONDITION OF SECTION 41(1) HAS NOT BEEN FULFILLED SO AS TO INVOKE THE SAME IN THE CASE OF THE APPELLANT. IT HAS BEEN CONTENDED BY THE APPELLANT THAT THIS LOAN WAS INTER EST FREE AND UNSECURED AND OBTAINED AND APPLIED FOR THE PURPOSE OF ACQUIRING T HE CAPITAL ASSETS BY WAY OF INVESTMENT IN SHARES. THEREAFTER THIS AMOUNT HAS BE EN CONSISTENTLY SHOWN AS UNSECURED LOAN IN THE BALANCE SHEET AS AND SUCH OUT STANDING AMOUNT IN THE YEAR UNDER CONSIDERATION WAS WRITTEN OFF IN THE BOOKS OF ACCOUNTS AND CORRESPONDING ACCOUNTING ENTRIES WERE PASSED. SINCE THE AMOUNT OF LOAN WRITTEN OFF CREDITED TO THE PROFIT AND LOSS ACCOUNT WAS CAPITAL IN NATURE AND T HEREFORE THE SAME HAS NOT BEEN INCLUDED IN THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE ARGUMENT MADE BY THE APPELLANT IN THIS REGARD WAS RELEVANT AND HA VE THE WEIGHT FOR THE REASON THAT NO SUCH EXPENDITURE IN RESPECT- OF THE UNSECURED LO AN HAS BEEN CLAIMED AS DEDUCTION BY THE APPELLANT IN THE PROFIT AND LOSS ACCOUNT OF THE YEAR UNDER CONSIDERATION OR OF THE PRECEDING YEARS. IN THIS REGARD RELIANCE HAS BE EN PLACED ON THE JUDGEMENT OF HON'BLE GUJARAT NIGH COURT IN THE CASE OF CIT VS. C HETAN CHEMICALS PVT. LTD. 267 ITR 770 WHEREBY IT HAS BEEN HELD THAT BENEFIT ARISI NG AS A RESULT OF REMISSION OF UNSECURED LOANS WAS NOT TAXABLE U/S.41(1) OF THE AC T AS ADMITTEDLY THERE HAD BEEN NO ALLOWANCE OR DEDUCTION OF THE LOANS IN ANY OF THE P RECEDING YEARS. IT HAS FURTHER BEEN HELD BY THE HON'BLE COURT THAT IF THE APPELLANT IS NOT IN THE BUSINESS OF OBTAINING AND GIVING THE LOANS, REMISSION OF THE LOANS BY THE CRE DITOR OF THE COMPANY IS NOT TAXABLE U/S.28(IV) OF THE I.T. ACT. THUS THIS DECISION IS S QUARELY APPLICABLE ON THE FACTS OF THE APPELLANT'S CASE. ON GOING THROUGH THE FACTS, IT HA S BEEN NOTICED THAT UNDISPUTEDLY THE APPELLANT WAS NOT IN THE BUSINESS OF OBTAINING AND GIVING LOANS AND SINCE NO ALLOWANCE OR DEDUCTION OF THE LOAN HAS BEEN GRANTED IN ANY OF THE PRECEDING YEARS, THEREFORE, THE PROVISIONS OF SECTION 41 (1) OF THE ACT IS ALSO NOT APPLICABLE. IN VIEW OF THE AFORESAID DECISION AND DISCUSSION, THE PROVISIO NS OF SECTION 28(IV) AS WELL THE BASIC CONDITION OF SECTION 41 (1) DOES NOT GET FULF ILLED. 2.9. IT HAS ALSO BEEN ARGUED THAT THAT THE UNSECURE D LOANS SO WRITTEN OFF WAS UTILIZED FOR THE PURPOSE OF ACQUISITION OF INVESTMENT BY WAY OF SHARES AND THE APPELLANT DID NOT CARRY OUT ANY TRADING ACTIVITY OF SHARES, THERE FORE, IT WAS NOT THE REGULAR BUSINESS ACTIVITY OF THE APPELLANT AND HENCE THE SAME CANNOT BE HELD TO BE THE BUSINESS INCOME U/S.28(IV) OF THE I.T. ACT. IT HAS ALSO BEEN ARGUED THAT THE CAPITAL GAIN ARISES ONLY WHEN THERE IS A TRANSFER OF THE CAPITAL ASSET BY TH E ASSESSEE. BUT THE UNSECURED LOAN FROM THE AFORESAID PARTY WAS A LIABILITY AND NOT TH E CAPITAL ASSET. FURTHER THERE WAS ITA NO.: 3328/AHD/16 ASSESSMENT YEAR: 2013-14 PAGE 5 OF 11 NO TRANSFER OF ANY CAPITAL ASSET THEREFORE THE QUES TION OF ANY CAPITAL GAIN DOES NOT ARISE. JUST BECAUSE THERE WAS NO CAPITAL GAIN IT DO ES NOT AUTOMATICALLY FOLLOW THAT THE RECEIPT SHOULD BE TREATED AS THE REVENUE INCOME. SI NCE THERE WAS NO OBLIGATION TO PAY THE LOAN ON ACCOUNT OF WRITE OFF, THE CHARACTER OF THE AMOUNT IN QUESTION DOES NOT CHANGE INTO A REVENUE RECEIPT AS THE UNSECURED LOAN WAS UTILIZED FOR THE PURPOSE OF ACQUISITION OF CAPITAL ASSET. WHEN A LOAN WHICH IS CAPITAL IN NATURE HAS BEEN WRITTEN OFF THE NATURE OF RECEIPTS DOES NOT CHANGE AND IT R EMAIN CAPITAL ONLY. THE APPELLANT HAS RELIED UPON THE JUDGEMENT OF HON'BLE BOMBAY HIG H COURT IN THE CASE OF MAHINDRA & MAHINDRA VS.CIT, 261 ITR 501 WHEREIN IT HAS BEEN HELD THAT LOAN TAKEN FOR ACQUIRING CAPITAL ASSETS WHEN WAIVED BY THE LEN DER, EITHER IN WHOLE OR IN PART THE AMOUNT OF LOAN WAIVE CANNOT BE TAXED AS INCOME SINC E IT DOES NOT HAVE ANY SEMBLANCE OF REVENUE NATURE. SINCE IN THE INSTANT CASE THE UN SECURED LOAN TAKEN BY THE APPELLANT WAS FOR IHE PURPOSE INVESTMENT IN SHARES AND SUCH I NVESTMENT HAS BEEN SHOWN IN THE BALANCE SHEET AND THE APPELLANT DID NOT HAVE ANY BU SINESS OF TRADING OF SHARES, THEREFORE, THE INVESTMENT WAS THE CAPITAL IN NATURE AND HENCE THE WAIVER OF UNSECURED LOANS UTILIZED FOR SUCH CAPITAL INVESTMENT IS NOT T HE REVENUE RECEIPTS IN VIEW OF THE JUDGEMENT DISCUSSED ABOVE. THE ARGUMENT OF THE APPE LLANT IN THIS REGARD HAS THE SUBSTANCE AND SAME IS ACCEPTED. 2.10. THE APPELLANT'S FURTHER PLEA THAT ALL THE CRE DITS MADE TO THE PROFIT AND LOSS ACCOUNT DO NOT CONSTRUED INCOME CHARGEABLE TO TAX A T ALL THE TIMES. THE CREDITS MADE TO THE PROFIT AND LOSS ACCOUNT WHICH ARE NOT OF REV ENUE NATURE BUT CAPITAL IN NATURE ARE TO BE EXCLUDED FROM THE COMPUTATION OF TOTAL IN COME. THE COMPUTATION OF INCOME HAS TO BE MADE IN ACCORDANCE TO THE PROVISIONS OF I NCOME-TAX ACT. AS PER THE PROVISIONS OF SECTION-4 THE INCOME TAX IS CHARGEABL E IN RESPECT OF INCOME OF THE RELEVANT PREVIOUS YEAR. BUT THE AMOUNT THAT HAS BEE N WRITTEN OFF DOES NOT FORM A REVENUE RECEIPT, HENCE IT DOES NOT GO TO INCOME OF THE ASSESSEE WITHIN THE MEANING AND SCOPE OF SECTION 2(24)(XVI)(I) OF THE I.T. ACT. IN THIS REGARD THE APPELLANT HAS RELIED UPON THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF KEDARNATH JUTE MANUFACTURING CO. 82 ITR 3A3 AND SATLAJ COTTON MILL S LTD. VS. CJT, 116 ITR 1 WHEREBY IT HAS BEEN HELD THAT THE ACCOUNTING ENTRIE S MADE IN THE BOOKS OF ACCOUNTS ARE NOT DECISIVE IN ARRIVING AT THE CONCLUSION AS T HE TAXABILITY OF A PARTICULAR RECEIPT. THE RECEIPT WOULD BECOME CHARGEABLE TO FAX ONLY IF IT IS A REVENUE RECEIPT AND FALLS WITHIN THE DEFINITION OF THE TERM INCOME AS PER SEC TION 2(24) (XVI) (I) OF THE I.T. ACT. SINCE THE UNSECURED LOAN WRITTEN OFF DID NOT FALL U NDER THE SCOPE OF INCOME AS PER THE AFORESAID PROVISION, THEREFORE, MERELY THE WRITTEN OFF OF THE UNSECURED LIABILITY IN THE PROFIT AND LOSS ACCOUNT AS TAKEN PLACE IN THE YEAR UNDER CONSIDERATION WOULD NOT AUTOMATICALLY BE TREATED AS INCOME OF THE APPELLANT . SINCE THE AMOUNT WAS NOT CHARGEABLE U/S.4 OR SECTION 5 OF THE ACT FOR WHICH EVERY PERSON IS LIABLE TO PAY THE TAXES AND ALSO IN ABSENCE OF ANY DEMONSTRATION THAT THE WRITTEN OFF OF THE LOANS WAS THE INCOME AS PER THE SECTION 2(24)(I)TO(X), THE SA ME CANNOT BE LIABLE TO BE CHARGEABLE AS REVENUE RECEIPTS IN THE HANDS OF THE APPELLANT. THIS CONTENTION OF THE APPELLANT IS ALSO FOUND CORRECT AND ACCEPTED IN VIE W OF THE JUDGEMENTS OF HON'BLE SUPREME COURT CITED ABOVE. 2.11. THE APPELLANT HAS ALSO GIVEN THE DETAILED SUB MISSION WITH THE REBUTTAL OF THE VARIOUS JUDGEMENTS CITED BY THE AO IN THE SHOW CAUS E NOTICE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER ITSELF. ITA NO.: 3328/AHD/16 ASSESSMENT YEAR: 2013-14 PAGE 6 OF 11 HENCE, APPLICABILITY OF THE DECISIONS ON WHICH AO R ELIED DOES NOT SUPPORT THE OBSERVATIONS OF THE AO. 2.12. THE APPELLANT HAS RELIED UPON THE JUDGEMENT O F HON'BLE SUPREME COURT IN THE CASE OF BOMBAY STEAM NAVIGATION CO. PVT. LTD. 56 IT R 52 WHEREBY IT HAS BEEN HELD THAT TAX WAS PAYABLE U/S.10(1) OF I.T. ACT, 1922 WH ICH WAS CORRESPONDING TO SECTION 28 OF I.T. ACT, 1961 BY AN ASSESSES ON ITS PROFITS DERIVED IN THE BUSINESS CARRIED ON BY HIM. IF NO BUSINESS AT ALL IS CARRIED ON IN THAT YE AR LIABILITY TO PAY TAX DOES NOT ARISE U/S. 10(1) OF THE ACT, 1922 CORRESPONDING TO SECTIO N 28 OF I.T. ACT, 1961. FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE APEX COURT, NO B USINESS INCOME CAN BE TAXED IN THE YEAR UNDER CONSIDERATION DUE TO ABSENCE OF ANY BUSINESS ACTIVITIES HAVING CARRIED OUT IN THE YEAR UNDER CONSIDERATION BY THE APPELLAN T. THUS, THE JUDGEMENT OF HON'BLE SUPREME COURT IS SQUARELY APPLICABLE OVER THE FACTS OF THE CASE. THE RELIANCE IN THIS REGARD IS ALSO PLACED ON THE SUPREME COURT JUDGMENT IN THE CASE OF NEW SAVAN SUGAR & GUR REFINING CO. LTD. VS. CIT (1969) 74 ITR 7 AND SERIAL RAM DOONGARMAL VS. CIT (1961) 42 ITR 392. AS A MATTER OF FACT, THE APP ELLANT HAD ONLY EARNED THE INCOME FROM DIVIDEND AND INTEREST ON FD WHICH WERE TAXABLE UNDER THE HEAD OF INCOME FROM OTHER SOURCE AND NO BUSINESS INCOME HAS BEEN OFFERE D BY THE APPELLANT. 2.13. IT HAS ALSO BEEN NOTICED THAT THE PROVISIONS OF SECTION 28(IV) OF THE I.T. ACT ARE ALSO APPLICABLE ONLY WHEN THE TAX PAYER HAS CARRIED ON BUSINESS DURING THE YEAR UNDER CONSIDERATION. SINCE THE APPELLANT HAS NOT CA RRIED OUT ANY BUSINESS ACTIVITIES NOR ENTERED INTO ANY TRANSACTIONS OF INCOME EARNING ACTIVITY, THEREFORE THE SECTION DOES NOT HAVE ITS APPLICABILITY UPON THE APPELLANT. FURTHER FOR COMPUTING THE INCOME UNDER THE HEAD INCOME FROM BUSINESS THE CONDITION P RECEDENT IS THAT THE INCOME HAS BEEN DERIVED FROM CARRYING ON OF BUSINESS AND THERE FORE CARRYING ON BUSINESSES IS A PRIMARY CONDITION FOR COMPUTATION OF INCOME FROM BU SINESS. FURTHER SUBMITTED THAT THE PROVISIONS OF SECTION 28(IV) OF THE ACT ARE IN RESPECT OF BENEFITS OF PERQUISITES WHICH ARE IN KIND AND IS NOT WITH RESPECT TO THE BE NEFITS OR PERQUISITES IN CASH. THE WRITING OFF OF A LOAN IS NOT A PERQUISITE OR BENEFI T IN KIND BUT IS A BENEFIT IN CASH. THEREFORE, SECTION 28(IV) IS NOT APPLICABLE TO ANY BENEFIT THAT HAS ARISEN AS A RESULT OF WRITING OFF OF THE LOAN. THUS IN ABSENCE OF ANY BUS INESS HAVING BEEN CARRIED OUT BY THE APPELLANT FROM A.Y. 2009-10 AND ONWARDS INCLUDING T HE YEAR UNDER CONSIDERATION THE TAXABILITY OF INCOME UNDER THE HEAD OF BUSINESS BY THE AO IS FOUND NOT CORRECT. IN THIS REGARD RELIANCE HAS BEEN PLACED ON THE JU DGEMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF MAHINDRA & MAHINDRA LTD. VS. C IT (SUPRA) WHEREBY IT HAS BEEN HELD THAT WAIVER OF LOAN AND INTEREST BY THE BANK I S NOT TAXABLE U/S.28(IV) AS THE PERQUISITE OR THE BENEFIT WAS NOT IN KIND BUT IN CA SH. FURTHER HON'BLE MADRAS HIGH COURT IN THE CASE OF ISKRAEMECO GEGENT LTD. VS. CIT 331 ITR 317 HAS HELD THAT SECTION 28(IV) SPEAKS THE BENEFIT OR PERQUISITE REC EIVED IN KIND AND IT DOES NOT HAVE ANY APPLICATION TO ANY TRANSACTION WHICH INVOLVES M ONEY. THE WRITTEN OFF OF A LOAN IS A TRANSACTION WHICH INVOLVES OF MONEY AND NO BENEFI T IN KIND AS SUCH. THIS VIEW IS ALSO SUPPORTED BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. ALCHEMIC PVT. LTD., 130 ITR 166. 2.14. THE APPELLANT HAS ALSO OBJECTED TO THE AO'S O BSERVATION THAT THERE IS NO OBJECT CLAUSE IN THE MEMORANDUM OF ASSOCIATION OF COMPANY WHICH AUTHORIZES THE COMPANY ITA NO.: 3328/AHD/16 ASSESSMENT YEAR: 2013-14 PAGE 7 OF 11 TO CARRY OUT THE BUSINESS OF TRADING IN SHARES. THE REFORE, THE APPELLANT HAS NEVER CARRIED OUT BUSINESS OF TRADING IN SHARES. THUS THE AO HAS NOT ESTABLISHED WITH ANY BASIS OR FROM THE MEMORANDUM OF ASSOCIATION TO HOLD HIS OBSERVATION THAT THE APPELLANT COMPANY WAS ENGAGED IN THE BUSINESS OF TR ADING OF SHARES. IN FACT THE APPELLANT WAS ENGAGED IN THE BUSINESS OF PROVIDING TECHNOLOGICAL SUPPORT SERVICES AND THE BUSINESS OF MANUFACTURE AND TRADING OF MEDI CAL EQUIPMENTS WHICH THE AO HIMSELF HAS NOTED IN COLUMN NO. 9 OF THE TABLE AT F IRST PAGE OF THE ASSESSMENT ORDER ITSELF. 2.15. IN FACT THE APPELLANT HAD MADE THE INVESTMENT IN SHARES AND WAS TREATED AS LONG TERM INVESTMENT ONLY IN THE BALANCE SHEETS OF THE P RECEDING YEARS AND NOT AS STOCK-IN- TRADE. ACCORDINGLY, ON SALE OF THESE SHARES THE INC OME DERIVED WAS OFFERED AS CAPITAL GAIN U/S.45 OF I.T. ACT AND THE SAME HAS BEEN TAXED AND ACCEPTED AS SUCH BY THE AO WHICH ITSELF PROVES THE CONTENTION OF THE APPELLANT OF HAVING NO TRADING ACTIVITIES OF SHARES. IT IS APPARENT FROM THE COPY OF RETURN OF I NCOME FOR A. Y. 2006-07 THAT THE APPELLANT HAS SHOWN THE LONG TERM CAPITAL GAIN ON S ALE OF SHARES AT RS.4,39,46,908/- UNDER THE HEAD OF INCOME FROM LONG TERM CAPITAL GAI N AND THE AO HAS ACCEPTED THE SAME AS LONG TERM CAPITAL GAIN IN THE ASSESSMENT CO MPLETED U/S. 143(3) OF THE I. T. ACT ON 01/12/2008. THUS, THE AOS OBSERVATION THAT THE A PPELLANT WAS ENGAGED IN TRADING OF SHARES DOES NOT GET ESTABLISHED FROM THE HISTORY OF THE APPELLANT ITSELF. 2.16. IT IS AN EMERGING FACT THAT EVEN IF ANY BENEF IT OR PERQUISITE AS ARISEN TO THE APPELLANT AS A RESULT OF WRITING OFF OF THE LOAN TH E SAME CANNOT BE EQUATED AS A BENEFIT ARISING FROM THE BUSINESS. THE WRITTEN OFF OF THE L OAN HAS NOTHING TO DO WITH THE BUSINESS OF THE APPELLANT BECAUSE LOAN WAS NOT OBTA INED FOR THE PURPOSE OF BUSINESS OR NOT OBTAINED IN THE NORMAL COURSE OF BUSINESS BU T WAS OBTAINED FOR THE SPECIFIC PURPOSE OF ACQUISITION OF INVESTMENT IN SHARES BEIN G CAPITAL ASSETS. CONSEQUENTLY, THE WRITTEN OFF OF THE LOAN WHICH DOES NOT HAVE CONNECT ION WITH THE BUSINESS ACTIVITY CANNOT BE SAID TO BE THE BUSINESS PROFITS. 2.17. IT HAS ALSO BEEN NOTICED THAT IN RESPECT OF T HE OUTSTANDING LOANS FROM MATRIX LOGISTICS LTD. OF RS. 11,07,39,123/- AS ON 01/04/20 12, THE LOANS TO THE EXTENT OF RS.6,64,43,474/- HAS BEEN WRITTEN OFF BY THE APPELL ANT ON 31/03/2012 AND THE BALANCE OUTSTANDING LOAN OF RS.4,42,95,649/- HAS BEEN WRITT EN OFF ON 31/03/2013 IN THE P & L ACCOUNT OF THE ASSESSMENT YEAR 2012-13 & 2013-14 RE SPECTIVELY. HOWEVER, THE AO ON THE ONE HAND HAS ACCEPTED THE WRITTEN OFF OF THE UN SECURED LOANS IN A, Y. 2012-13 AS CAPITAL RECEIPTS AND NO SUCH ADDITION U/S. 41(1) / 28(IV) HAS BEEN MADE IN THE ASSESSMENT COMPLETED U/S. 143(3) OF THE I. T. ACT O N 09/03/2015. BUT IN THE ASSESSMENT OF A. Y. 2013-14, TAKING A DIFFERENT VIEW WITHOUT A NY BASIS AND DIFFERENCE ON FACTS, THE ADDITION FOR THE WRITTEN OFF OF THE UNSECURED LOANS HAS BEEN MADE. IT AMPLY PROVES THAT THE AO HAS TAKEN DUAL STAND IN HIS APPROACH ON THE ISSUE AND ONCE IT HAS ACCEPTED THE SAME AS CAPITAL RECEIPTS IN A. Y. 2012-13, THEN WIT HOUT ANY REASONS THE SAME COULD NOT HAVE BEEN HELD TO BE REVENUE RECEIPTS IN A. Y. 2013-14. 2.18. IN VIEW OF THE AFORESAID DISCUSSION, IT HAS B EEN NOTICED THAT THE PROVISIONS OF SECTION 41 (1) AND 28(IV) OF THE ACT ARE NOT APPLIC ABLE OVER THE FACTS OF THE CASE IN VIEW OF THE FACTS AS WELL AS VARIOUS JUDGEMENTS OF HON'BLE COURTS. SINCE THE UNSECURED LOANS WERE IN THE NATURE OF CAPITAL AND N OT THE TRADING LIABILITY AND MORE ITA NO.: 3328/AHD/16 ASSESSMENT YEAR: 2013-14 PAGE 8 OF 11 SO NO DEDUCTION THEREOF HAS BEEN CLAIMED IN THE PRO FIT ARID LOSS ACCOUNT OF THE APPELLANT IN THE YEAR UNDER CONSIDERATION OR ANY OF THE PRECEDING YEARS, THEREFORE,. SECTION 41(1) OF THE I.T. ACT IS NOT APPLICABLE. SI MILARLY SECTION 28(IV) IS ALSO NOT APPLICABLE AS THE APPELLANT DID NOT HAVE ANY BUSINE SS ACTIVITIES IN THE YEAR UNDER CONSIDERATION MOREOVER THE APPELLANT DID NOT DERIVE ANY BENEFIT IN KIND. THE WRITTEN OFF OF THE UNSECURED LOANS IS ALSO NOT THE INCOME I N ANY OF THE CLAUSES TO SECTION 2(24) OF THE I.T. ACT. EVEN THE UNSECURED LOANS HAVE BEEN UTILIZED FOR THE PURPOSE OF INVESTMENT IN SHARES WHICH WAS NOT THE REGULAR BUSI NESS ACTIVITIES OF THE APPELLANT. THESE SHARES HAVE BEEN SHOWN AS LONG TERM INVESTMEN T IN THE BALANCE SHEET OF THE APPELLANT IN THE PRECEDING YEARS AND ON SALE OF SUC H SHARES THE LONG TERM CAPITAL GAIN HAS BEEN OFFERED U/S.45 OF I.T. ACT WHICH HAS NOT B EEN DISPUTED BY THE AO. THUS THE NATURE OF UNSECURED LOANS WERE NOT OF TRADING LIABI LITY BUT ON ACCOUNT OF CAPITAL. THEREFORE, THE WRITTEN OFF OF THE UNSECURED LOAN WA S CAPITAL RECEIPTS IN THE HANDS OF THE APPELLANT WHICH WAS NOT LIABLE FOR TAXATION. TH US THE ADDITION MADE BY THE AO IN THIS REGARD IS FOUND NOT ACCEPTED AND HENCE THE SAM E IS DELETED. 4. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 6. WE FIND THAT WHETHER THE CREDIT IS ROUTED THROUG H THE PROFIT AND LOSS ACCOUNT OR NOT IS WHOLLY IRRELEVANT FOR DETERMINING THE NATURE OF REC EIPT. AS HELD BY HONBLE SUPREME COURTS LANDMARK JUDGMENT IN THE CASE OF KEDARNATH JUTE MFG CO LTD VS CIT [(1971) 82 ITR 36 3 (SC)] , THE ACCOUNTING ENTRIES CANNOT BE DETERMINATIVE OF THE NATURE OF RECEIPT. IN ANY CASE, WHAT CAN BE ADDED TO INCOME UNDER SECTION 41(1) IS SOMETHING IN RESPECT OF WHICH DEDUCTION HAS BEEN ALLOWED IN PAST. IT IS AN ESSENTIAL PREREQ UISITE FOR INVOKING SECTION 41(1) THAT AN ALLOWANCE OR DEDUCTION HAS BEEN MADE IN THE ASSESSM ENT FOR ANY YEAR IN RESPECT OF LOSS, EXPENDITURE OR TRADING LIABILITY INCURRED BY THE AS SESSEE AND IT IS ONLY WHEN THE ASSESSEE DERIVES ANY BENEFIT IN RESPECT OF WAIVER OF SUCH LI ABILITY THAT THE PROVISIONS OF SECTION 41(1) CAN BE INVOKED. UNLESS, THEREFORE, IT IS SHOWN THAT THE ASSESSEE HAS BEEN ALLOWED ANY DEDUCTION IN PAST, SECTION 41(1) CANNOT BE INVOKED. SIMILARLY, AS REGARDS THE TAXABILITY UNDER SECTION 28(IV) IT CAN ONLY COME INTO PLAY ONLY IN C ASE OF BENEFITS OTHER THAN THE RECEIPT OF CASH OR MONEY. ON BOTH THE COUNTS, THE CASE OF THE REVEN UE FAILS, AND BOTH OF THESE ISSUES ARE NOW DIRECTLY COVERED BY HONBLE SUPREME COURTS JUDGMEN T IN THE CASE OF CIT VS MAHINDRA & MAHINDRA LTD [(2018) 302 CTR 213 (SC)] , WHEREIN HONBLE SUPREME COURT HAS, INTER ALIA, OBSERVED AS FOLLOWS: 10. THE TERM 'LOAN' GENERALLY REFERS TO BORROWING S OMETHING, ESPECIALLY A SUM OF CASH THAT IS TO BE PAID BACK ALONG WITH THE INTERES T DECIDED MUTUALLY BY THE PARTIES. IN OTHER TERMS, THE DEBTOR IS UNDER A LIAB ILITY TO PAY BACK THE PRINCIPAL AMOUNT ALONG WITH THE AGREED RATE OF INTEREST WITHI N A STIPULATED TIME. 11. IT IS A WELL-SETTLED PRINCIPLE THAT CREDITOR OR HIS SUCCESSOR MAY EXERCISE THEIR 'RIGHT OF WAIVER' UNILATERALLY TO ABSOLVE THE DEBTO R FROM HIS LIABILITY TO REPAY. AFTER SUCH EXERCISE, THE DEBTOR IS DEEMED TO BE ABS OLVED FROM THE LIABILITY OF REPAYMENT OF LOAN SUBJECT TO THE CONDITIONS OF WAIV ER. THE WAIVER MAY BE A ITA NO.: 3328/AHD/16 ASSESSMENT YEAR: 2013-14 PAGE 9 OF 11 PARTLY WAIVER I.E., WAIVER OF PART OF THE PRINCIPAL OR INTEREST REPAYABLE, OR A COMPLETE WAIVER OF BOTH THE LOAN AS WELL AS INTERES T AMOUNTS. HENCE, WAIVER OF LOAN BY THE CREDITOR RESULTS IN THE DEBTOR HAVING E XTRA CASH IN HIS HAND. IT IS RECEIPT IN THE HANDS OF THE DEBTOR/ASSESSEE. THE SH ORT BUT COGENT ISSUE IN THE INSTANT CASE ARISES WHETHER WAIVER OF LOAN BY THE C REDITOR IS TAXABLE AS A PERQUISITE UNDER SECTION 28 (IV) OF THE IT ACT OR T AXABLE AS A REMISSION OF LIABILITY UNDER SECTION 41 (1) OF THE IT ACT. 12. THE FIRST ISSUE IS THE APPLICABILITY OF SECTION 28 (IV) OF THE IT ACT IN THE PRESENT CASE. BEFORE MOVING FURTHER, WE DEEM IT APP OSITE TO REPRODUCE THE RELEVANT PROVISION HEREIN BELOW: '28. PROFITS AND GAINS OF BUSINESS OR PROFESSION. THE FOLLOWING INCOME SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD 'PROFITS AN D GAINS OF BUSINESS PROFESSION', ** ** ** (IV) THE VALUE OF ANY BENEFIT OR PERQUISITE, WHETHE R CONVERTIBLE INTO MONEY OR NOT, ARISING FROM BUSINESS OR THE EXERCISE OF A PROFESSI ON; ** ** **' 13. ON A PLAIN READING OF SECTION 28 (IV) OF THE IT ACT, PRIMA FACIE, IT APPEARS THAT FOR THE APPLICABILITY OF THE SAID PROVISION, T HE INCOME WHICH CAN BE TAXED SHALL ARISE FROM THE BUSINESS OR PROFESSION. ALSO, IN ORDER TO INVOKE THE PROVISION OF SECTION 28 (IV) OF THE IT ACT, THE BENEFIT WHICH IS RECEIVED HAS TO BE IN SOME OTHER FORM RATHER THAN IN THE SHAPE OF MONEY. IN TH E PRESENT CASE, IT IS A MATTER OF RECORD THAT THE AMOUNT OF RS. 57,74,064/- IS HAV ING RECEIVED AS CASH RECEIPT DUE TO THE WAIVER OF LOAN. THEREFORE, THE VERY FIRS T CONDITION OF SECTION 28 (IV) OF THE IT ACT WHICH SAYS ANY BENEFIT OR PERQUISITE ARI SING FROM THE BUSINESS SHALL BE IN THE FORM OF BENEFIT OR PERQUISITE OTHER THAN IN THE SHAPE OF MONEY, IS NOT SATISFIED IN THE PRESENT CASE. HENCE, IN OUR VIEW, IN NO CIRCUMSTANCES, IT CAN BE SAID THAT THE AMOUNT OF RS 57,74,064/- CAN BE TAXED UNDER THE PROVISIONS OF SECTION 28 (IV) OF THE IT ACT. 14. ANOTHER IMPORTANT ISSUE WHICH ARISES IS THE APP LICABILITY OF THE SECTION 41 (1) OF THE IT ACT. THE SAID PROVISION IS RE-PRODUCED AS UNDER: '41. PROFITS CHARGEABLE TO TAX.- (1) WHERE AN ALLOW ANCE OR DEDUCTION HAS BEEN MADE IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF L OSS, EXPENDITURE OR TRADING LIABILITY INCURRED BY THE ASSESSEE (HEREINAFTER REF ERRED TO AS THE FIRST-MENTIONED PERSON) AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR,- (A) THE FIRST-MENTIONED PERSON HAS OBTAINED, WHETHE R IN CASH OR IN ANY OTHER MANNER WHATSOEVER, ANY AMOUNT IN RESPECT OF SUCH LO SS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF, THE AMOUNT OBTAINED BY SUCH PERSON OR THE VALUE OF BENEFIT ACCRUING TO HIM SHALL BE DEEMED TO BE PROFITS AND GAINS OF BUSI NESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME-TAX AS THE INCOME OF THAT PREVIOUS YEAR, ITA NO.: 3328/AHD/16 ASSESSMENT YEAR: 2013-14 PAGE 10 OF 11 WHETHER THE BUSINESS OR PROFESSION IN RESPECT OF WH ICH THE ALLOWANCE OR DEDUCTION HAS BEEN MADE IS IN EXISTENCE IN THAT YEA R OR NOT; OR ** ** **' 15. ON A PERUSAL OF THE SAID PROVISION, IT IS EVIDE NT THAT IT IS A SINE QUA NON THAT THERE SHOULD BE AN ALLOWANCE OR DEDUCTION CLAIMED B Y THE ASSESSEE IN ANY ASSESSMENT FOR ANY YEAR IN RESPECT OF LOSS, EXPENDI TURE OR TRADING LIABILITY INCURRED BY THE ASSESSEE. THEN, SUBSEQUENTLY, DURIN G ANY PREVIOUS YEAR, IF THE CREDITOR REMITS OR WAIVES ANY SUCH LIABILITY, THEN THE ASSESSEE IS LIABLE TO PAY TAX UNDER SECTION 41 OF THE IT ACT. THE OBJECTIVE BEHIN D THIS SECTION IS SIMPLE. IT IS MADE TO ENSURE THAT THE ASSESSEE DOES NOT GET AWAY WITH A DOUBLE BENEFIT ONCE BY WAY OF DEDUCTION AND ANOTHER BY NOT BEING TAXED ON THE BENEFIT RECEIVED BY HIM IN THE LATER YEAR WITH REFERENCE TO DEDUCTION ALLOW ED EARLIER IN CASE OF REMISSION OF SUCH LIABILITY. IT IS UNDISPUTED FACT THAT THE R ESPONDENT HAD BEEN PAYING INTEREST AT 6 % PER ANNUM TO THE KJC AS PER THE CON TRACT BUT THE ASSESSEE NEVER CLAIMED DEDUCTION FOR PAYMENT OF INTEREST UNDER SEC TION 36 (1) (III) OF THE IT ACT. IN THE CASE AT HAND, LEARNED CIT (A) RELIED UPON SE CTION 41 (1) OF THE IT ACT AND HELD THAT THE RESPONDENT HAD RECEIVED AMORTIZATION BENEFIT. AMORTIZATION IS AN ACCOUNTING TERM THAT REFERS TO THE PROCESS OF ALLOC ATING THE COST OF AN ASSET OVER A PERIOD OF TIME, HENCE, IT IS NOTHING ELSE THAN DEPR ECIATION. DEPRECIATION IS A REDUCTION IN THE VALUE OF AN ASSET OVER TIME, IN PA RTICULAR, TO WEAR AND TEAR. THEREFORE, THE DEDUCTION CLAIMED BY THE RESPONDENT IN PREVIOUS ASSESSMENT YEARS WAS DUE TO THE DEPRECATION OF THE MACHINE AND NOT ON THE INTEREST PAID BY IT. 16. MOREOVER, THE PURCHASE EFFECTED FROM THE KAISER JEEP CORPORATION IS IN RESPECT OF PLANT, MACHINERY AND TOOLING EQUIPMENTS WHICH ARE CAPITAL ASSETS OF THE RESPONDENT. IT IS IMPORTANT TO NOTE THAT THE SA ID PURCHASE AMOUNT HAD NOT BEEN DEBITED TO THE TRADING ACCOUNT OR TO THE PROFI T OR LOSS ACCOUNT IN ANY OF THE ASSESSMENT YEARS. HERE, WE DEEM IT PROPER TO MENTIO N THAT THERE IS DIFFERENCE BETWEEN 'TRADING LIABILITY' AND 'OTHER LIABILITY'. SECTION 41 (1) OF THE IT ACT PARTICULARLY DEALS WITH THE REMISSION OF TRADING LI ABILITY. WHEREAS IN THE INSTANT CASE, WAIVER OF LOAN AMOUNTS TO CESSATION OF LIABIL ITY OTHER THAN TRADING LIABILITY. HENCE, WE FIND NO FORCE IN THE ARGUMENT OF THE REVE NUE THAT THE CASE OF THE RESPONDENT WOULD FALL UNDER SECTION 41 (1) OF THE I T ACT. 17. TO SUM UP, WE ARE NOT INCLINED TO INTERFERE WIT H THE JUDGMENT AND ORDER PASSED BY THE HIGH COURT IN VIEW OF THE FOLLOWING R EASONS: (A) SECTION 28(IV) OF THE IT ACT DOES NOT APPLY ON THE PRESENT CASE SINCE THE RECEIPTS OF RS 57,74,064/- ARE IN THE NATURE OF CAS H OR MONEY. (B) SECTION 41(1) OF THE IT ACT DOES NOT APPLY SIN CE WAIVER OF LOAN DOES NOT AMOUNT TO CESSATION OF TRADING LIABILITY. IT IS A M ATTER OF RECORD THAT THE RESPONDENT HAS NOT CLAIMED ANY DEDUCTION UNDER SECT ION 36 (1) (III) OF THE IT ACT QUA THE PAYMENT OF INTEREST IN ANY PREVIOUS YEAR. ITA NO.: 3328/AHD/16 ASSESSMENT YEAR: 2013-14 PAGE 11 OF 11 7. IN VIEW OF THE ABOVE DISCUSSIONS, AND RESPECTFUL LY FOLLOWING THE ESTEEMED VIEWS OF HONBLE SUPREME COURT IN THE CASE OF MAHINDRA AND M AHINDRA LTD (SUPRA), WE APPROVE THE LINE OF REASONING ADOPTED BY THE CIT(A). THE ASSESS ING OFFICER WAS CLEARLY IN ERROR IN INVOKING THE PROVISIONS OF SECTION 41(1) ON THE FAC TS OF THIS CASE, AND THE CIT(A) WAS PERFECTLY JUSTIFIED IN REVERSING THE STAND OF THE A SSESSING OFFICER. 8. AS WE HAVE DECIDED THE APPEAL ON THE ABOVE SHORT GROUNDS, WE SEE NO NEED TO ADDRESS OURSELVES TO CERTAIN OTHER ASPECTS OF THE MATTER, S UCH AS THE IMPLICATIONS OF THE ENTRIES OF WRITE OFF HAVING BEEN MADE IN THE PRECEDING YEAR ETC, SO STRENUOUSLY ARGUED BY THE LEARNED COUNSEL FOR THE ASSESSEE. THOSE ASPECTS ARE, IN THE LIGHT O F OUR ABOVE FINDINGS, ACADEMIC AS ON NOW. 9. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNC ED IN THE OPEN COURT TODAY ON THE 3 RD DAY OF JUNE, 2019. SD/- SD/- JUSTICE P P BHATT PRAMOD KUMAR (PRESIDENT) (V ICE PRESIDENT) AHMEDABAD, DATED THE 3 RD DAY OF JUNE, 2019 COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT/DEPUTY REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD