DCIT, New Delhi V. M/s. Adroitec Information System (P) Ltd., New Delhi

ITA 591/DEL/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3070 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 03-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S K JAIN SR DR SHRI S D KAPILA

Judgement Text

PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH - A NEW DELHI BEFORE HON'BLE PRESIDENT SHRI G.D. AGRAWAL AND SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO.591/DEL/2012 ASSESSMENT YEAR : 2008-09 DCIT CIRCLE-1 (1) NEW DELHI. VS. ADROITEC INFORMATION SYSTEM (P) LTD. D-194, OKHLA INDUSTRIAL AREA, PHASE-1, NEW DELHI. PAN AAACH2422A (APPELLANT) (RESPONDENT) PER BHAVNESH SAINI, JUDICIAL MEMBER ORDER THIS APPEAL BY REVENUE HAS BEEN DIRECTED A GAINST THE ORDER OF LD. CIT(A) IV NEW DELHI DATED 1 ST NOVEMBER, 2011 FOR ASSTT. YEAR 2008-09 CHALLENGING THE DELETION OF ADDITION OF RS. 1,21,02,913/- ON ACCOUNT OF WAIVER OF LOAN. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT AS PER AS SESSMENT ORDER, THE ASSESSEE HAD A LOAN LIABILITY OF RS. 5,14,00,00 0/- PAYABLE TO STATE ASSESSEE BY : SHRI S.K. JAIN, SR. DR DEPARTMENT BY: SHRI S.D. KAPILA, SHRI SUSHIL KUMAR, SHRI PRAVESH SHARDA & SHRI SANJAY KUMAR, ADVOCATES DATE OF HEARING 05/06/2017 DATE OF PRONOUNCEMENT 08/06/2017 ITA NO. 591/DEL/2012 DCIT VS. ADROITEC INFORMATION SYSTEM (P) LTD. PAGE 2 OF 7 BANK OF HYDERABAD WHICH WAS SETTLED AS PER THE ONE TIME SETTLEMENT REACHED WITH THE BANK FOR AN AMOUNT OF RS. 2,50,00, 000/-. IT WAS OBSERVED BY THE AO THAT THE DIFFERENCE AMOUNT OF RS . 2,64,00,000/- WAS A WAIVER OF THE LOAN. OUT OF THIS, THE ASSESSEE HAS SUO MOTTO OFFERED AN AMOUNT OF RS. 19,80,536/- AS INCOME FOR THE YEAR UNDER CONSIDERATION AND RS. 1,23,16,551/- AS INCOME IN TH E EARLIER YEARS. THE AO HAS ACCORDINGLY ADDED THE BALANCE AMOUNT OF RS. 1,21,02,913/- AS INCOME OF THE ASSESSEE FOR THE YEA R UNDER APPEAL U/S 28(IV) OF THE ACT. 3. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(A) AND WRITTEN SUBMISSIONS OF THE ASSESSEE IS REPRODUCED I N THE IMPUGNED ORDER IN WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT IT HAS TAKEN A LOAN FROM THE BANK LONG TIME BACK AND HAD BEEN MAKING PA YMENTS WITH THE BANK REGULARLY. THE LOAN WAS GRANTED TO THE ASS ESSEE @ 9.5% PER ANNUM. THE ASSESSEE INCURRED LOSSES IN FINANCIAL YE AR 2001-02 ONWARDS AND WAS THEREFORE NOT ABLE TO MAKE SOME OF THE PAYMENTS TO THE BANK ON TIME. AS THE SOME OF PAYMENTS WERE NO T MADE ON TIME, BANK STARTED DEBITING IN ITS BOOKS OF ACCOUNTS INTE REST AT HIGHER RATE. ASSESSEE HOWEVER CONTINUED TO PROVIDE INTEREST IN I TS BOOKS OF ACCOUNTS AT 9.5%. THE OUTSTANDING AMOUNT AS ON 30 TH JUNE, 2002 IN THE BOOKS OF THE ASSESSEE AND WITH THE BANK WAS ALM OST SAME BUT THE ITA NO. 591/DEL/2012 DCIT VS. ADROITEC INFORMATION SYSTEM (P) LTD. PAGE 3 OF 7 DIFFERENCE WAS DUE TO ADDITIONAL INTEREST DEBITED B Y THE BANK IN THEIR BOOKS OF ACCOUNTS. IN THE ASSESSMENT YEAR UNDER AP PEAL THE ASSESSEE WAS IN THE PROCESS OF INDUCTING A NEW INVESTOR AND THEREFORE ASSESSEE DECIDED TO SETTLE THE OUTSTANDING LOAN OUT OF THE M ONEY BROUGHT IN BY THE NEW INVESTOR. ON 31 ST MARCH, 2008 THE OUTSTANDING LOAN AS PER THE ASSESSEES BOOK WAS RS. 2,20,00,000/-. THIS BAL ANCE WAS AFTER WRITING BACK INTEREST INCOME OF RS. 1,23,16,551/- AND LOAN OF RS. 19,80,536/-. IF THESE HAVE NOT BEEN CONSIDERED AS I NCOME, THEN THE LOAN AS PER BOOKS WOULD HAVE BEEN RS. 3.62 CRORES. PRIOR TO THAT A SUM OF RS. 30 LACS, HAD BEEN PAID TO THE BANK AS IN ITIAL PAYMENT FOR SETTLEMENT. WITHOUT THIS PAYMENT OF RS. 30 LACS , T HE BALANCE WOULD HAVE BEEN RS. 3.92 CRORES. THE TOTAL RECOVERABLE FR OM THE ASSESSEE WAS RS. 5.14 CRORES AS PER BOOKS OF THE BANK BECAUS E OF THE DIFFERENTIAL RATE OF INTEREST DEBITED BY THE BANK A ND NOTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE . SETTLEMENT WAS ARRIVED WITH THE BANK TO PAY RS. 2.50 CRORES AS FULL AND FINAL PAYME NT. THUS THE ASSESSEES LIABILITY WAS REDUCED BY RS. 1,42,97,087 /- (RS. 3,92,97,087/- - RS. 2.50 CRORES) AS PER ITS BOOKS OF ACCOUNTS. THE ASSESSEE IN THE BOOKS OF ACCOUNTS RECORDED THE WAIV ER OF REVERSAL OF INTEREST OF RS. 1,23,16,551/- AND WAIVER OF PRINCI PAL OF RS. 19,80,536/-. THUS TOTAL COMES TO RS. 1.42 CRORES. I NTEREST WAS REVERSED IN ASSESSMENT YEARS 2004-05 TO 2007-08. C OPY OF THE ITA NO. 591/DEL/2012 DCIT VS. ADROITEC INFORMATION SYSTEM (P) LTD. PAGE 4 OF 7 RETURN OF INCOME AND STATEMENT OF INCOME WERE FILED FOR FINANCIAL YEAR 2004-05 TO 2008-09. THE AMOUNT OF RS. 1,42,97, 087/- WAS CONSIDERED AS INCOME. NO DEDUCTION WAS CLAIMED IN T HE COMPUTATION OF INCOME EITHER IN RESPECT OF RS. 1.23 CRORES OR IN RESPECT OF RS. 19,80,536/-. IN THE COURSE OF ASSESSMENT PROCEEDING S, IT WAS REALIZED THAT SUM OF RS. 1.23 CRORES WAS INTEREST RELATING T O FINANCIAL YEAR 2004-05, 2005-06 AND 2006-07 AND THAT THE SAME WAS NOT CLAIMED BY ASSESSEE DUE TO APPLICATION OF SECTION 43B.THE AO H AS HOWEVER TAKEN THE VIEW THAT THE TOTAL WAIVER BY THE BANK WA S OF RS. 2.64 CRORES ( RS. 5.14 CRORE AS PER BOOKS OF THE BANK LE SS RS. 2.50 CRORES PAID BY THE ASSESSEE). BASED ON THIS VIEW THAT WAIV ER IS OF RS. 2.64 CRORES AND ASSESSEE HAS ALREADY DECLARED INCOME OF RS. 1.42 CRORE AS ITS INCOME, DIFFERENCE WAS ADDED OF RS. 1,21,02,913 /- WHICH IS SUBJECT MATTER OF THE PRESENT APPEAL. IT WAS SUBMIT TED THAT THE LOAN IS SHOWN BECAUSE OF THE HIGHER INTEREST CHARGED BY THE BANK AS AGAINST THE INTEREST ON SANCTIONED LOAN. MERELY BECAUSE BA NK WAS MAKING A CLAIM OF HIGHER AMOUNT, IT DOES NOT BECOME WAIVER T O THE ASSESSEE 4. LD. CIT(A) NOTED THE DETAILS OF LOAN LIABILITY A S COMPUTED BY THE BANK AND REPRODUCED THE SAME IN THE IMPUGNED OR DER. THE ASSESSEE ALSO FILED RECONCILIATION STATEMENT AND TH E SUBMISSIONS FILED BY THE ASSESSEE IS REPRODUCED IN THE IMPUGNED ORDER AND NOTED THAT ITA NO. 591/DEL/2012 DCIT VS. ADROITEC INFORMATION SYSTEM (P) LTD. PAGE 5 OF 7 THE DIFFERENCE OF IMPUGNED AMOUNT OF RS. 1,21,02,91 3/- ADDED BY THE AO RELATED TO THE DIFFERENTIAL BETWEEN THE RATE OF INTEREST CHARGED BY THE BANK AND THE RATE APPLIED BY THE ASSESSEE AND A LSO THE AMOUNT OF BANK GUARANTEE WHICH WAS NEVER INVOKED BY THE PARTY . THE ASSESSEE EXPLAINED THAT SINCE THE SAID AMOUNT WAS NEVER DEBI TED TO THE ASSESSEES BOOK AND NEVER CLAIMED AS EXPENDITURE IN ITS RETURN OF INCOME, THE SAME CANNOT BE ADDED AS CESSATION OF LI ABILITY OR AS BENEFIT ARISING FROM BUSINESS U/S 28(IV) OF THE ACT . LD. CIT(A) ACCORDINGLY DELETED THE ADDITION. 5. LD. DR RELIED UPON THE ORDER OF AO AND SUBMITTED THAT ON WAIVER OF LOAN ASSESSEE WAS UNDER OBLIGATION TO SHO W IMPUGNED AMOUNT AS ITS INCOME. ON THE OTHER HAND LD. COUNSEL FOR ASSESSEE REDIRECTED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT IN FACT IT WAS A WAIVER OF THE INTER EST NOT AS WAIVER OF THE LOAN. THEREFORE, LD. CIT(A) CORRECTLY DELETED T HE ADDITION. 6. THE RECORD REVEALED THAT EARLIER DEPARTMENTAL AP PEAL WAS DISMISSED HOLDING IT TO BE INFRUCTUOUS VIDE ORDER D ATED 23 RD NOVEMBER, 2015. HOWEVER THE SAID ORDER WAS RECALLED BY ALLOWING MISCELLANEOUS APPLICATION FILED BY REVENUE VIDE ORD ER DATED 18 TH ITA NO. 591/DEL/2012 DCIT VS. ADROITEC INFORMATION SYSTEM (P) LTD. PAGE 6 OF 7 NOVEMBER, 2016 AND DEPARTMENTAL APPEAL WAS REFIXED FOR HEARING ON MERITS. 7. AFTER CONSIDERING RIVAL SUBMISSIONS, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELET ING THE ADDITION. THE FACTS AS NOTED BY THE LD. CIT(A) ARE NOT IN DIS PUTE . IT IS NOT IN DISPUTE THAT ASSESSEE HAD TAKEN LOAN FROM THE BANK AT THE INTEREST OF 9.5% PER ANNUM. SINCE ASSESSEE WAS INCURRING LOSSES AND SOME PAYMENTS WERE NOT MADE TO THE BANK ON TIME THEREFOR E THE BANKS STARTED DEBITING HIGHER RATE OF INTEREST IN THEIR B OOKS OF ACCOUNTS. HOWEVER, THE ASSESSEE CONTINUED TO PROVIDE INTEREST IN ITS BOOKS OF ACCOUNTS AS WERE PROVIDED ON THE SANCTIONED LOAN. T HE ASSESSEE FILED COMPLETE DETAILS TO SHOW THAT WHEN THE MATTER WAS S ETTLED WITH THE BANK AND LUMPSUM PAYMENT OF RS. 2.50 CRORE WAS PAID TO THE BANK, THERE WAS A WAIVER OF INTEREST. THE ASSESSEE THEREF ORE RIGHTLY CONTENDED THAT MERELY BECAUSE BANK WAS MAKING A CLA IM OF HIGHER AMOUNT OF INTEREST, IT WOULD NOT BECOME WAIVER TO THE ASSESSEE. IT IS ALSO ADMITTED FACT THAT ASSESSEE HAS NEVER CLAIMED A WAIVER OF INTEREST AS EXPENDITURE IN ITS BOOKS OF ACCOUNTS AN D RETURN OF INCOME. THEREFORE, THERE IS NO QUESTION OF CONSIDERING IT T O CESSATION OF LIABILITY OR ANY BENEFIT ARISES FROM THE BUSINESS. LD. CIT(A), THEREFORE, ON PROPER APPRECIATION OF FACTS AND MATE RIAL ON RECORD ITA NO. 591/DEL/2012 DCIT VS. ADROITEC INFORMATION SYSTEM (P) LTD. PAGE 7 OF 7 RIGHTLY DELETED THE IMPUGNED ADDITION. NO INTERFERE NCE IS CALLED FOR IN THE MATTER. THE DEPARTMENTAL APPEAL STANDS DISMI SSED. 8. IN THE RESULT DEPARTMENTAL APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT. SD/- SD/- (G.D. AGRAWAL) ( BHAVNESH SAINI ) HON'BLE PRESIDENT JUDICIAL MEMBER DATED: 08.06.2017 *VEENA* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. PRINCIPAL CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR