ITO 2(3)(3), MUMBAI V. TOPICAL BUILDERS P.LTD, MUMBAI

ITA 6089/MUM/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7149 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 30-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G PANSARI
• Keywords: Capital asset; Depreciation; Capital receipt
• Section: 36 (1) (iii); 133(6); 28

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL E B ENCH MUMBAI BEFORE SHRI G.S. PANNU, VICE- PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 6089/MUM/2014 (ASSESSMENT YEAR 2010-11) ITO-7(3)(2), ROOM NO.616, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. VS. M/S. TOPICAL BUILDERS P. LTD. (NOW KNOWN AS M/S. MAHINDRA WORLD CITY (MAHARASHTRA LTD.), 5 TH FLOOR, MAHINDRA TOWER, P.K. KURNE CHOWK, WORLI, MUMBAI-400018. P AN: AABCT2713M APPELLANT RESPONDENT APPELLANT BY : SHRI D.G. PANSARI (DR) RESPONDENT BY : SHRI H.P. MAHAJANI WITH SHRI PRASAD BAPAT (AR) DATE OF HEARING : 23.01.2019 DATE OF PRONOUNCEMEN T : 29.03.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-6, MUMBAI (THE LD. CIT(A) D ATED 03.06.2014 FOR ASSESSMENT YEAR 2010-11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) ERRED IN HOLDING THAT LOAN LIABILITY WRITTEN OFF OF RS. 521.60 LACS CANNOT BE TAXED U/S 28(IV) WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD TAKEN LOANS FOR THE EXPANSION OF ITS BUSINESS BY ACQUIRIN G A CONTROLLING STAKE IN ITA NO. 6089 MUM 2014 -M/S. TOPICAL BUILDERS P. LTD. 2 M/S DEEP MANGAL DEVELOPERS PVT. LTD. ENGAGED IN THE SIMILAR REAL ESTATE BUSINESS AND AS SUCH THE SAME WERE FOR THE PURPOSE OF BUSINESS. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) ERRED IN HOLDING THAT LOAN LIABILITY WRITTEN OFF OF RS. 521.60 LACS CANNOT BE TAXED U/S 28(IV) WITHOUT TAKING INTO CONSIDERATION THE DECISION OF THE BOMBAY HIGH COURT REPORTED IN 308 ITR 417. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A BUILDERS AND DEVELOPERS FILED HIS RETURN OF INCOME ON 08.09.2010 DECLARING TOTAL INCOME LOSS RS. (-) 3,309/-. 3. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED ON 25.03.2013 UNDER SECTION 143(3). DURIN G THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS T AKEN A LOAN OF RS. 661.74 LAKHS FROM MAHINDRA REALTY AND INFRASTRUCTUR E DEVELOPERS LIMITED (MRIDL) DURING THE YEAR 1997-98 TO 1999. TH E ASSESSEE HAS BEEN CARRYING ON THIS LIABILITY IN ITS BOOKS OF ACC OUNT FOR ALMOST 10 YEARS. THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE REASONS FOR EXISTENCE OF LIABILITY. THE ASSESSEE FURNISHED ITS EXPLANATION A ND CONTENDED THAT THE ASSESSEE HAS TAKEN A LOAN OF RS. 661.74 LAKHS FROM MRIDL. THE LOAN WAS REALIZED FOR ACQUISITION OF SHARE OF DEEP MANGA L DEVELOPERS PVT LTD.(DEEP MANGAL). THE ASSESSEE ACQUIRED 740 SHARES OF RS. 100/- EACH OF DEEP MANGAL DEVELOPERS AND PAID A TOTAL COST OF RS. 828.29 LAKHS. THE REALTY AND INFRASTRUCTURE DIVISION OF MRIDL WAS DEMERGED AND AMALGAMATED WITH GESCO CORPORATION LIMITED, WHICH I S KNOWN AS MAHINDRA LIFESPACE DEVELOPERS LIMITED (MLDL). THE A SSESSING OFFICER ITA NO. 6089 MUM 2014 -M/S. TOPICAL BUILDERS P. LTD. 3 ISSUED NOTICE UNDER SECTION 133(6) TO MLDL. IN RESP ONSE TO THE NOTICE UNDER SECTION 133(6), M/S MLDL CONFIRMED THE BALANC E LOAN LIABILITY OF LOAN OF RS. 140.14 LAKHS ONLY. M/S MLDL FURTHER CO NFIRMED THAT HAD WRITTEN OFF THE AMOUNT DUE FROM THE ASSESSEE TO T HE EXTENT OF RS. 5,01,93,000/- IN FINANCIAL YEAR (FY) 2000-01 AND RS . 19,76,000/- IN FY 2002-03. THE ASSESSING OFFICER, THEREFORE, HELD THA T THE ASSESSEES BALANCE LOAN LIABILITY OF RS. 521.06 LAKHS WAS NOT IN EXISTENCE AS LENDER HAD WRITTEN OF THE SAME IN ITS BOOKS OF ACCOUNT. TH E ASSESSING OFFICER BROUGHT THE DIFFERENCE OF RS. 521.60 LAKHS FOR TAXA TION IN THE INCOME OF ASSESSEE AS NON-EXISTING LIABILITY BY TREATING IT A S INCOME OF THE ASSESSEE. 4. ON APPEAL BEFORE THE LD. CIT(A), THE ENTIRE ADDITIO N WAS DELETED. THE LD. CIT(A) DELETED THE ADDITION HOLDING THAT, WHEN CRED ITORS HAD WAIVED THE REPAYMENT OF LOAN AMOUNT, IT AMOUNTED TO CAPITAL RE CEIPT AND NOT REVENUE RECEIPT. THE WAIVER CANNOT BE CONSTITUTE INCOME OF THE ASSESSEE. THE LD. CIT(A) ALSO HELD THAT FOR THE PURPOSE OF APPLICABIL ITY OF SECTION 28(IV), THE BENEFIT OR PERQUISITE MUST RELATE TO THE REVENU E ACCOUNT OF THE ASSESSEE. THE LIABILITY OF ASSESSEE WAS A CAPITAL L IABILITY AND LOAN WAS TAKEN FOR THE PURPOSE OF INVESTMENT IN SHARE TO DEE P MANGAL. THE LD. CIT(A) ALSO HELD THAT THE CESSATION OF LIABILITY IS ALSO NOT TAXABLE UNDER ANY OTHER PROVISION OF THE ACT AS THE SAID LIABILIT Y DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION. THUS, AGGRIEVED BY THE OR DER OF LD. CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ITA NO. 6089 MUM 2014 -M/S. TOPICAL BUILDERS P. LTD. 4 5. WE HAVE HEARD THE SUBMISSION OF LD. DEPARTMENTAL RE PRESENTATIVE (DR) FOR THE REVENUE AND LD. AUTHORIZED REPRESENTATIVE ( AR) OF THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. DR FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER. THE LD. D R FURTHER SUBMITS THAT THE CREDITOR HAS WRITTEN OFF IN THEIR BOOKS OF ACCO UNT DUE FROM THE ASSESSEE-COMPANY TO THE EXTENT OF RS. 5,01,93,000/- FOR FINANCIAL YEAR 2000-01 AND RS. 19,67,000/- SOMETIME IN FINANCIAL Y EAR 2002-03 AND THE AMOUNT DUE FROM THE ASSESSEE-COMPANY IS ONLY RS. 1. 40 CRORE. THE ASSESSEE CREDITOR, THUS, WRITE OF THE LIABILITY TO THE EXTENT OF RS. 5.21 CRORE. THERE WAS NO JUSTIFICATION ON THE PART OF AS SESSEE TO CONTINUE ITS LIABILITY WHICH IS ALREADY WRITTEN OFF BY THE CREDI TOR. NO CLAIM WHATSOEVER HAS BEEN MADE BY THE CREDITOR FOR SUCH A LONG TIME. THE SO-CALLED UNSECURED LOAN DOES NOT ANY MORE TAKE A CHARACTER O F LOAN BUT IN REALITY, THE SAME PARTAKES THE CHARACTER OF INCOME. THE ASSE SSEE HAS TAKEN A LOAN AND INVESTED IN SHARE OF DEEP MANGAL AT AN ABNORMAL PRICE BY MAKING PAYMENT OF HUGE PREMIUM ON WHICH THE ASSESSEE HAS N OT RECEIVED ANY DIVIDEND. THE LD. DR FOR THE REVENUE IN SUPPORT OF HIS SUBMISSION RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN S OLID CONTAINER VS. DCIT (308 ITR 417 (BOM), MADRAS HIGH COURT IN CIT V S. RAMANIYAM HOMES (P.) LTLD. (384 ITR 530 (MADRAS) AND THE DECI SION OF HONBLE SUPREME COURT IN CIT VS. T.V. SUNDARAM IYENGAR & SO NS LIMITED (222 ITR 344). ITA NO. 6089 MUM 2014 -M/S. TOPICAL BUILDERS P. LTD. 5 6. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUPPO RTED THE ORDER OF LD. CIT(A). THE LD. AR OF THE ASSESSEE SUBMITS THAT DUR ING THE YEAR 1997 TO 1999, THE ASSESSEE AVAILED A LOAN OF RS. 6.61 CRORE FROM GROUP COMPANY I.E. MRIDL. THE ENTIRE LOAN AMOUNT WAS INVESTED IN THE SHARE OF OTHER GROUP COMPANY NAMELY DEEP MANGAL FOR PURCHASE OF SH ARE. THE TOTAL CONSIDERATION WAS PAID FOR PURCHASE OF SHARE OF RS. 8.28 CRORE. THE PAYMENT ON PURCHASE OF SHARE WAS FINANCED BY THE LO AN OF RS. 6.61 CRORE AVAILED FROM MRIDL AND THE BALANCE OF RS. 1.66 CROR E WAS FINANCED FROM OTHER BORROWINGS. THE SHARE OF DEEP MANGAL WAS PURCHASED AS THE HUGE PREMIUM BECAUSE THE SAID COMPANY OWNED A HUGE PIECE OF LAND AT MURUD, HOWEVER, THE PROJECT OF DEEP MANGAL TAKES OF F FOR TECHNICAL REASONS. THEREFORE, DURING THE FINANCIAL YEAR 2000- 01 MRIDL WROTE OFF SUBSTANTIAL PORTION OF LOAN OF RS. 5.01 CRORE IN TH E BOOKS OF ACCOUNT OF MRIDL, THE LOAN AMOUNT REMAINS ONLY OF RS. 1.59 CRO RE (BEING RS. 6,61,74,000/- MINUS RS. 5,01,93,000/-). THE ASSESSE E MADE NO CORRESPONDING CHANGE IN ITS BOOKS OF ACCOUNT, THE L OAN IN THE BOOKS OF ACCOUNT CONTINUED AS IT IS. THE REALTY AND INFRASTR UCTURE DIVISION OF MRIDL WAS DEMERGED AND AMALGAMATED WITH GESCO CORPO RATION, WHICH IS NOW KNOWN AS MLDL. DURING THE FINANCIAL YEAR 200 2-03 MLDL ALSO WRITE OF RS. 19.67 LAKHS IN ITS BOOKS OF ACCOUNTS, THUS, THE BALANCE RECEIVABLE FROM THE ASSESSEE IS ONLY 1.40 CRORE. ST ILL NO CORRESPONDING CHANGE WAS MADE BY ASSESSEE IN ITS BOOKS OF ACCOUNT . THE LIABILITY IN THE ITA NO. 6089 MUM 2014 -M/S. TOPICAL BUILDERS P. LTD. 6 BOOKS OF ACCOUNT OF ASSESSEE CONTINUED AT RS. 6.61 CRORE. DURING THE ASSESSMENT PROCEEDING OF CURRENT ASSESSMENT YEAR, T HE ASSESSING OFFICER MADE ENQUIRIES UNDER SECTION 133(6). IN RESPONSE TO THE NOTICE UNDER SECTION 133(6) MLDL RESPONDED WITH BALANCE RECEIVAB LE FROM ASSESSEE AT RS. 1.40 CRORE AGAINST THE LIABILITY OF RS. 6.61 CR ORE. THE DIFFERENCE OF RS. 5.21 LAKHS WAS ADDED BY ASSESSING OFFICER TO TH E INCOME OF ASSESSEE AS NON-EXISTING LIABILITY. 7. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT THE OBSERVATION OF ASSESSING OFFICER THAT LOAN WAS BORROWED FOR BUSINE SS PURPOSE FOR ACQUIRING CONTROL IN DEEP MANGAL IS FACTUALLY INCOR RECT BECAUSE YEAR AFTER YEAR, THE DEPARTMENT HAS BEEN ACCEPTED AS A PURE IN VESTMENT. IN SHARE AND DENYING THIS TO BE BUSINESS ACTIVITIES. THE LD. AR OF THE ASSESSEE SUBMITS THAT HE HAS FILED A COPY OF ASSESSMENT ORDER FOR AS SESSMENT YEAR 2001-02 WHEREIN THIS FACT HAS BEEN OBSERVED BY ASSESSING OF FICER. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT IN THE BALANCE SH EET OF ASSESSEES SHARE HOLDING HAS BEEN TREATED AS A LONG TERM INVESTMENT WHICH HAS BEEN REMAINED UNCHANGED IN 10 YEARS. 8. DURING THE PERIOD UNDER CONSIDERATION, NO TAXABLE E VENT AND IN ABSENCE OF ANY SUCH EVENT, INCOME CANNOT BE ASSESSED OR BROUGH T TO CHARGE TO TAX. FOR THE YEAR UNDER CONSIDERATION THERE IS NO CHANGE IN BOOKS OF ACCOUNT. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT THE REVENUE HAS RAISED THE GROUNDS FOR TAXING THE TAXABILITY OF LOAN BENEFIT I N THE NATURE OF WRITE OFF ITA NO. 6089 MUM 2014 -M/S. TOPICAL BUILDERS P. LTD. 7 BY LENDER ITSELF. THE PROVISION OF SECTION IS 28(IV ) IS NOT APPLICABLE TO THE FINANCIAL TRANSACTION UNDER CONSIDERATION. THIS HAS BEEN HELD SO BY HONBLE JURISDICTIONAL HIGH COURT IN CASE OF MAHIND RA & MAHINDRA LTD. 9261 ITR 501). SECTION 28(IV) BRINGS TO CHARGE TO T AX VALUE OF ANY BENEFIT OR PERQUISITE, WHETHER CONVERTIBLE INTO MONEY AS OR NOT ARISING FROM BUSINESS OR EXERCISE OF PROFESSION. THE BENEFIT DER IVED BY ASSESSEE IS NOT ARISING OUT OF BUSINESS OR ANY BENEFIT OR PERQUISIT E. THE ASSESSEE HAS RECEIVED BENEFIT WHICH A CHARACTER OF CAPITAL AND C ANNOT BE CHARGED TO TAX. 9. THE LD. AR OF THE ASSESSEE SUBMITS THAT THE DECISIO N OF SOLID CONTAINER (SUPRA) IS NOT APPLICABLE. IN CASE OF SOLID CONTAIN ER, THE WAIVER OF LOAN WAS TAKEN FOR TRADING ACTIVITIES AND THE ASSESSEE H AS CREDITED SUCH A WAIVER TO THE PROFIT & LOSS ACCOUNT CLAIMED TO BE A CAPITAL RECEIPT. THE RATIO IN CASE OF T.V. SUNDARAM IYENGAR & SONS LIMIT ED (SUPRA) IS ALSO NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. IN T. V. SUNDARAM IYENGAR & SONS LIMITED (SUPRA), THE LOAN/ADVANCE CONSTITUTED A TRADING LIABILITY OR WAS TAKEN UNDER TRADING ACCOUNT, THEREFORE, THE FAC TS OF THIS CASE ARE DIFFER TO THE PRESENT CASE. 10. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT DEC ISION OF HONBLE BOMBAY HIGH COURT IN MAHINDRA AND MAHINDRA (SUPRA) HAS BEEN AFFIRMED BY HONBLE APEX COURT IN ITA NO. 6949/6950/2004 DAT ED 24.04.2018. ITA NO. 6089 MUM 2014 -M/S. TOPICAL BUILDERS P. LTD. 8 THE LD. AR OF THE ASSESSEE FINALLY SUBMITS THAT THE WRITE OFF OF RS. 521.06 LAKH CANNOT BE TAXED EITHER UNDER SECTION 28(IV) OR UNDER SECTION 41(1). 11. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE AL SO DELIBERATED ON VARIOUS CASE LAWS RELIED BY LOWER AUTHORITIES AND T HE LD. REPRESENTATIVE OF THE PARTIES. DURING THE ASSESSMENT THE ASSESSING OF FICER MADE INVESTIGATION ABOUT CARRYING THE LOAN LIABILITY IN ITS BOOKS OF ACCOUNT FOR ALMOST 10 YEARS. THE ASSESSING OFFICER ISSUED NOTIC E TO THE CREDITORS. ON RECEIPT OF CONFIRMATION FROM MLDL THAT THE CREDITOR HAS WRITE OFF OF RS. 5.01 CRORE IN FINANCIAL YEAR 2000-01 AND RS. 19.67 LAKHS IN FINANCIAL YEAR 2002-03 TREATED THE AMOUNT AS UNCLAIMED DEPOSI T AND TIME BARRED DEPOSIT AS TRADING RECEIPT ON THE BASIS OF DECISION OF T.V. SUNDARAM IYENGAR & SONS LIMITED (SUPRA). BEFORE THE LD. CIT( A), THE ASSESSEE URGED THAT LIABILITY TO REFUND THE LOAN CONTINUED S INCE LIABILITY STILL EXIST AND ALSO REFLECTED IN THE FINANCIAL STATEMENT OF TH E ASSESSEE. THE ASSESSEE ALSO CONTENDED THAT PROVISION OF SECTION 41(1) ARE ALSO NOT APPLICABLE AS IT IS NOT THE REMISSION OF LIABILITY AND NOT CLAIMED O N ALLOWANCE FOR DEDUCTION MADE IN THE ASSESSMENT OF ANY EARLIER YEA RS. THE ASSESSEE ALSO EXPLAINED THAT LOAN WAS TAKEN ON CAPITAL ACCOUNT FO R MAKING INVESTMENT IN SHARE OF DEEP MANGAL (SUPRA). FURTHER, NO LOAN W AS TAKEN DURING THE YEAR UNDER CONSIDERATION AND EVEN IN THE LAST 10 YE ARS, THE LOAN BALANCE HAS BEEN CARRIED FORWARD IN THE ACCOUNTS OF ASSESSE E. THE SAID BALANCE ITA NO. 6089 MUM 2014 -M/S. TOPICAL BUILDERS P. LTD. 9 WAS ALWAYS ACCEPTED BY REVENUE, THE ASSESSING OFFIC ER IN ASSESSMENT YEAR 2001-02 WHILE PASSING THE ASSESSMENT ORDER HAS CONSIDERED THE LOAN TRANSACTION AS A COLORABLE DEVICE AND NOT ALLOWANCE OR DEDUCTION OF LOAN WAS MADE IN ANY EARLIER YEARS. THE LD. CIT(A) AFTER PERUSING THE RECORD AND CONSIDERING THE SUBMISSION OF ASSESSEE FRAMED T HREE QUESTION FOR HIS CONSIDERATION (I) WHETHER LIABILITY OF RS. 5.21 CRO RE HAVING SEIZED TO EXIST, WAS A CAPITAL LIABILITY AND WHETHER AT PRESE NT IT CAN BE CONSIDERED TO HAVE CHANGED ITS CHARACTER AND HAS TAXABLE IN THE H AND OF ASSESSEE AS A REVENUE RECEIPT (II) WHETHER THE SAID AMOUNT CAN BE TAXED UNDER THE PROVISION OF SECTION 41(1) OR ELSE UNDER SECTION 28 (IV) OF THE ACT AND OR (III) WHETHER THE SAID AMOUNT CAN BE TAXED UNDER AN Y OTHER PROVISION OF THE ACT. 12. THE LD. CIT(A) EXAMINED THE FACTS OF THE CASE WITH THE FACTS OF DECISION IN T.V. SUNDARAM IYENGAR & SONS LIMITED (SUPRA) AND FIND THAT THE ASSESSEE IN THAT CASE RECEIVED BENEFIT ON ACCOUNT O F CESSATION OF LIABILITY IN RESPECT OF THE SUM/DEPOSIT RECEIVED ON ACCOUNT O F TRADING TRANSACTION, THE LIABILITY SHALL SEIZED TO EXIST, BECAME THE INC OME OF ASSESSEE UNDER SECTION 41 OR SECTION 28. IN CASE OF ASSESSEE, THE LIABILITY WAS A CAPITAL LIABILITY AND LOAN WAS TAKEN ON ACCOUNT OF CAPITAL ACCOUNT FOR THE PURPOSE OF INVESTMENT IN SHARE. NO LOAN WAS TAKEN DURING TH E YEAR OR EVEN IN LAST 10 YEARS. THE LOAN BALANCE HAS BEEN CARRIED FORWARD IN THE ACCOUNT OF ASSESSEE FOR MORE THAN 10 YEARS. THE BALANCE WAS AL WAYS ACCEPTED BY ITA NO. 6089 MUM 2014 -M/S. TOPICAL BUILDERS P. LTD. 10 ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDE R EVEN IN ASSESSMENT YEAR 2001-02. THE ASSESSEE HAS NOT CLAIMED ANY ALLO WANCE OR DEDUCTION OF LOAN AMOUNT IN EARLIER YEARS. THUS, CANNOT BE TA XED UNDER SECTION 41(1) OF THE ACT. THE LD. CIT(A) FURTHER CONCLUDED THAT A SSESSEE HAS CAPITAL LIABILITY AND THE LOAN WAS UTILIZED FOR PURCHASE OF SHARE OF SISTER CONCERN, HAVING SEIZED TO EXIST CANNOT BE TAXED AS A REVENUE RECEIPT, THE LIABILITY SEIZED TO EXIST, WAS A CAPITAL ACCOUNT AND HENCE SA ME IS NOT IN THE HANDS OF THE ASSESSEE. 13. THE LD. CIT(A) BY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN MAHINDRA AND MAHINDRA (SUPRA), WHEREIN IT WAS HE LD THAT LOAN RECEIVED FOR PURPOSE OF CAPITAL ASSET WOULD NOT CONSTITUTE A TRADING LIABILITY AND ACCORDINGLY SECTION 41(1) WAS NOT ATTRACTED. SINCE THE CAPITAL LIABILITY HAS NOT CHANGED ITS CHARACTER AT THE TIME WHEN IT SEIZE D TO EXIST, THEREFORE, THE LD. CIT(A) FINALLY CONCLUDED THAT THE PROVISION OF SECTION 41(1) OR SECTION 28(IV) ARE NOT ATTRACTED, THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION TO THE TOTAL INCOME OF ASSES SEE AND DIRECTED TO DELETE THE ENTIRE ADDITION. 14. WE HAVE NOTED THAT HONBLE SUPREME COURT IN CIT V S. MAHINDRA AND MAHINDRA (SUPRA) WHILE DISMISSING THE APPEAL OF REV ENUE HELD AS UNDER: 13. ON A PLAIN READING OF SECTION 28 (IV) OF THE I T 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 BEN EFIT WHICH IS RECEIVED HAS TO ITA NO. 6089 MUM 2014 -M/S. TOPICAL BUILDERS P. LTD. 11 BE IN SOME OTHER FORM RATHER THAN IN THE SHAPE OF M ONEY. IN THE PRESENT CASE, IT IS A MATTER OF RECORD THAT THE AMOUNT OF RS. 57,74, 064/- IS HAVING RECEIVED 'AS CASH RECEIPT DUE TO THE WAIVER OF LOAN. THEREFORE, THE VERY FIRST CONDITION OF SECTION 28 (IV) OF THE IT ACT WHICH SAYS ANY BENEFI T OR PERQUISITE ARISING FROM THE BUSINESS SHALL BE IN THE FORM OF BENEFIT OR PER QUISITE OTHER THAN IN THE SHAPE OF MONEY, IS NOT SATISFIED IN THE PRESENT CASE. HEN CE, 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 A CT. 14) ANOTHER IMPORTANT ISSUE WHICH ARISES IS THE APP LICABILITY OF THE SECTION 41 (1) OF THE IT ACT. THE SAID PROVISION IS RE-PRODUCE D 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 LOSS, EXPENDITURE OR TRADING LIABILITY INCURRED BY THE ASSESSEE (HEREINA FTER REFERRED TO AS THE FIRST- MENTIONED PERSON) AND SUBSEQUENTLY DURING ANY PREVI OUS 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 B Y WAY OF REMISSION OR CESSATION THEREOF, THE AMOUNT OBTAINED BY SUCH PERS ON OR THE VALUE OF BENEFIT ACCRUING TO HIM SHALL BE DEEMED TO BE PROFI TS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME- TAX AS THE INCOME OF THAT PREVIOUS YEAR, WHETHER THE BUSINESS OR PROFESS ION IN RESPECT OF WHICH THE ALLOWANCE OR DEDUCTION HAS BEEN MADE IS IN EXIS TENCE IN THAT YEAR OR NOT; OR XXX' 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 B EHIND 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 T AXED ON THE BENEFIT RECEIVED BY HIM IN THE LATER YEAR WITH REFERENCE TO DEDUCTION ALLOWED EARLIER IN CASE OF REMISSION OF SUCH LIABILITY. IT IS UNDISPUT ED FACT THAT THE RESPONDENT HAD ITA NO. 6089 MUM 2014 -M/S. TOPICAL BUILDERS P. LTD. 12 BEEN PAYING INTEREST AT 6 % PER ANNUM TO THE KJC AS PER THE CONTRACT BUT THE ASSESSEE NEVER CLAIMED DEDUCTION FOR PAYMENT OF INT EREST UNDER SECTION 36 (1) (III) OF THE IT ACT. IN THE CASE AT HAND, LEARNED C IT (A) RELIED UPON SECTION 41 (1) OF THE IT ACT AND HELD THAT THE RESPONDENT HAD RECEIVED AMORTIZATION BENEFIT. AMORTIZATION IS AN ACCOUNTING TERM THAT RE FERS TO THE PROCESS OF ALLOCATING THE COST OF AN ASSET OVER A PERIOD OF TI ME, HENCE, IT IS NOTHING ELSE THAN DEPRECIATION. DEPRECIATION IS A REDUCTION IN T HE VALUE OF AN ASSET OVER TIME, IN PARTICULAR, TO WEAR AND TEAR. THEREFORE, T HE 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 REVENUE THAT THE CASE OF THE RESPONDENT WOULD FALL UNDER SECTION 41 (1) O F THE IT 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. 18) IN VIEW OF ABOVE DISCUSSION, WE ARE OF THE CONS IDERED VIEW THAT THESE APPEALS ARE DEVOID OF MERITS AND DESERVE TO BE DISM ISSED. ACCORDINGLY, THE APPEALS ARE DISMISSED. ALL THE OTHER CONNECTED APPE ALS ARE DISPOSED OFF ACCORDINGLY, LEAVING PARTIES TO BEAR THEIR OWN COST . ITA NO. 6089 MUM 2014 -M/S. TOPICAL BUILDERS P. LTD. 13 15. IN VIEW OF THE ABOVE FACTUAL AND LEGAL DISCUSSION, WE DO NOT FIND ANY ILLEGALITY IN THE ORDER PASSED BY LD. CIT(A). THE C ASE LAW RELIED BY LD. DR FOR THE REVENUE IS DISTINGUISHABLE ON THE FACTS OF THE PRESENT CASE. 16. IN SOLID CONTAINER (SUPRA), THE ASSESSEE HAS TAKEN A LOAN FOR THE PURPOSE OF BUSINESS AND WAS RIGHT BACK IN THE RELEVANT ASSE SSMENT YEAR. THE HONBLE BOMBAY HIGH COURT IN SOLID CONTAINER (SUPRA ), RELIED UPON THE CASE OF T.V. SUNDARAM IYENGAR & SONS LIMITED (SUPRA ), WHEREIN THE LOAN/ADVANCE CONSTITUTED A TRADING LIABILITY AND WA S TAKEN UNDER THE TRADING ACCOUNT. THUS, IN OUR HUMBLE OPINION, THE R ATIO OF SAID DECISION IS NOT APPLICABLE. MOREOVER, THE DECISION OF HONBLE B OMBAY HIGH COURT IN MAHINDRA AND MAHINDRA (SUPRA) HAS BEEN AFFIRMED BY THE HONBLE APEX COURT. 17. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE GROUNDS OF APPEAL RAISED BY REVENUE. 18. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/ 03/2019. SD/- SD/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 29.03.2019 SK ITA NO. 6089 MUM 2014 -M/S. TOPICAL BUILDERS P. LTD. 14 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR E BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI