KUMAR WIRE CLOTH MANUFACTURING CO. LTD, RAIGAD V. ITO 5(2)(2), MUMBAI

ITA 6284/MUM/2012

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5219 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 12-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: V CHANDRASEKHAR
• Keywords: Capital asset; Depreciation; Capital receipt
• Section: 143(3); 191; 68

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL H BENCH MUMB AI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 6284/MUM/2012 (ASSESSMENT YEAR 2008-09 ) M/S KUMAR WIRE CLOTH MANUFACTURING CO. LTD. D-23, MIDC, TALOJA, TAL-PANVEL, DISTRICT-RAIGAD, 410218. PAN: AAACK1716E VS. ITO WARD - 5(2)(2) MUMBAI. APPELLANT RESPONDE NT APPELLANT BY : SHRI V.CHANDRASEKHAR (AR) RESPONDENT BY : MS. POOJA SWAROOP (AR) DATE OF HEARING : 10.07.2018 DATE OF PRONOUNCEMEN T : 05.10.2018 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME -TAX ACT IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-9, MUMBAI DATED 24. 07.2012 FOR ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 6,83,70 9/-BEING CLAIM OF DEPRECATION ON ENTIRE FIXED ASSETS (PARA 5.3 OF LD. CIT(A) ORDER.) 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 1,46,78 3/- BEING CLAIM OF MANUFACTURING EXPENSES INCURRED DURING THE YEAR. (P ARA 5.4) 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIA(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 27,415/ - BEING CLAIM OF POWER AND FUEL EXPENSES. (PARA 5.4 ) 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 89,10,570/- BEING THE PROVISION OF SALES TAX WHICH WERE NOT CLAIMED AS EXPENSES IN EAR LIER YEARS AND SHOWN BELOW THE LINE IN PROFIT & LOSS ACCOUNT. (PARA 5.7) ITA NO. 6284 MUM 2012-M/S KUMAR WIRE CLOTH MANUFACTURING CO . LTD. 2 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS. 2,47,52,200 /- BEING CESSATION OF LIABILITY OF BANK LOAN ON OTS. (PARA 5(8). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2008 -09 ON 29.09.2008 DECLARING LOSS OF RS. 8,59,681/-. IN THE RETURN OF INCOME, THE ASSESSEE CLAIMED BROUGHT FORWARD BUSINESS LOSS AND DEPRECIAT ION OF EARLIER YEARS OF RS. 4,48,58,020/-. THE RETURN OF INCOME WAS SELECTE D FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED ON 07.12.2010 UNDER SECTIO N 143(3) OF THE ACT. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER BESIDES THE OTHER ADDITION AND DISALLOWANCE, DISALLOWED RS. 6,8 3,709/- ON ACCOUNT OF DEPRECIATION ON FIXED ASSETS, RS. 11,46,783/- ON AC COUNT OF MANUFACTURING EXPENSES, RS. 27,415/- ON ACCOUNT OF POWER & FUEL E XPENSES, ADDITION OF RS. 89,10,570/- BEING PROVISION FOR SALE TAX WH ICH WAS NOT CLAIMED AS EXPENSES IN EARLIER YEARS AND ADDITION OF RS. 2,47, 52,200/- ON ACCOUNT OF CESSATION OF LIABILITY ON BANK LOAN ON ONE TIME SET TLEMENT SCHEME. ON APPEAL BEFORE THE LD. CIT(A), ALL THE ADDITION/DISA LLOWANCE WERE CONFIRMED. THEREFORE, FURTHER AGGRIEVED BY THE ORDE R OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSIONS OF LD. AUTHORISED REP RESENTATIVE (AR) FOR THE ASSESSEE AND THE LD. DEPARTMENTAL REPRESENTATIV E (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. WE HAVE SEEN THAT THE ASSESSEE HAS FILED AN APPLICATION FOR ADMISSION OF ADDITIONAL GROUNDS OF ITA NO. 6284 MUM 2012-M/S KUMAR WIRE CLOTH MANUFACTURING CO . LTD. 3 APPEAL VIDE APPLICATION DATED 05/01/2016, HOWEVER A T THE TIME OF MAKING SUBMISSIONS THE LD AR FOR THE ASSESSEE NEITHER REFE RRED NOR MADE ANY SUBMISSIONS, THEREFORE, THE APPLICATION FOR ADMISSI ONS OF ADDITIONAL GROUNDS OF APPEAL IS DISMISSED AS NOT PRESSED. 4. GROUND NO.1 TO 3 RELATES TO DISALLOWANCE OF DEPRICI ATION ON FIXED ASSET, MANUFACTURING EXPENSES AND FUEL & POWER EXPENSES. T HE LD. AR OF THE ASSESSEE SUBMITS THAT DUE TO HEAVY LOSS IN EARLIER YEARS, THE ASSESSEE WAS NOT ABLE TO DO THE BUSINESS. THE ASSESSEE COMPANY W AS DECLARED SICK UNDER THE PROVISION OF SICK INDUSTRIAL COMPANIES (S PECIAL PROVISIONS) ACT. DUE TO CONTINUOUS LOSSES THE ASSESSEE FILED AN APPLICATION BEFORE BOARD OF INDUSTRIAL FINANCE AND RECONSTRUCTION (BIF R) AND IN FINANCIAL YEAR 2006-07 AND THE ASSESSEE WAS DECLARED AS SICK COMPANY. DURING THE FINANCIAL YEAR 2007-08, THE ASSESSEE HAD SUSPENDED ITS PRODUCTION AS HEARING ON THE APPLICATION BEFORE BIFR WERE PENDING . IN SUBSEQUENT YEARS THE ASSESSEE HAS SHOWN REVENUE FROM ITS OPERA TIONS AND THE RECORD OF FINANCIAL STATEMENTS FOR ASSESSMENT YEAR 2012-13, W HEREIN THE ASSESSEE HAS SHOWN REVENUE FROM OPERATION OF RS. 31,65,047/- AND OTHER INCOME AT RS. 19,50,000/-, COPY OF FINANCIAL STATEMENTS ARE PLACED ON RECORD. THE LD. AR FOR THE ASSESSEE PRAYED FOR ALLOWING DEPRICIATIO N AND OTHER EXPENSES. IT WAS SUBMITTED THAT THE ASSESSEE HAS ALSO PLACED ON RECORD THE STATEMENT OF PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED ON 31.0 3.2012( PER PAGE NO. 191 TO 198 OF PAPER BOOK). THE LD. AR OF THE ASSESS EE FURTHER SUBMITS THAT ITA NO. 6284 MUM 2012-M/S KUMAR WIRE CLOTH MANUFACTURING CO . LTD. 4 NO DISALLOWANCE OF DEPRECIATION ON FIXED ASSETS IS WARRANTED, WHEN THERE WAS TEMPORARY LULL IN THE BUSINESS OF THE ASSESSEE. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF TRIBUNAL IN KING PRAWNS LIMITED VS ITO IN ITA NO. 60/MUM/201 0 DATED 14.12.2010. 5. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDERS OF AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE SUBMI TS THAT CASE LAW RELIED BY LD. AR OF THE ASSESSEE IS NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. THE ASSESSEE WAS DECLARED SEEK COMPANY IN ASSESSMEN T YEAR 2004-05. SUCH A LONG PERIOD IT CANNOT BE HELD TO BE TEMPORAR Y LULL IN THE BUSINESS OF ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER NOTED THAT ASSESS EE HAS CLAIMED DEPRECIATION, AND OTHER EXPENSES E.G. MANUFACTURING AND POWER AND FUEL EXPENSES. THE ASSESSING OFFICER DISALLOWED THE DEPR ICIATION AND OTHER EXPENSES ON HIS OBSERVATION THAT NO REPLY WAS FILED BY THE ASSESSEE. THE LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICE R HOLDING THAT NO PRODUCTION WAS DONE DURING THE PERIOD. WE HAVE NOTE D THAT THE ASSESSEE BEFORE THE ASSESSING OFFICER IN ITS WRITTEN SUBMISS IONS CONTENDED THAT COMPANY IS DECLARED SEEKS UNDER THE PROVISION OF SI CK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT. FROM THE FACTS AND THE DOCUMENTS ITA NO. 6284 MUM 2012-M/S KUMAR WIRE CLOTH MANUFACTURING CO . LTD. 5 PLACED ON RECORD, THE ASSESSEE HAS BROUGHT SUFFICIE NT DOCUMENTARY EVIDENCES TO PROVE ITS CONTENTIONS THAT DUE TO CONT INUOUS LOSSES THE ASSESSEE FILED AN APPLICATION BEFORE BOARD OF INDUS TRIAL FINANCE AND RECONSTRUCTION (BIFR) AND IN FINANCIAL YEAR 2006-07 THE ASSESSEE WAS DECLARED AS SICK COMPANY. DURING THE FINANCIAL YEAR 2007-08, THE ASSESSEE HAD SUSPENDED ITS PRODUCTION AS HEARING ON THE APPL ICATION BEFORE BIFR WERE PENDING. IT IS ALSO BROUGHT ON RECORD THAT I N SUBSEQUENT YEARS THE ASSESSEE HAS SHOWN REVENUE FROM ITS OPERATIONS AND THE RECORD OF FINANCIAL STATEMENTS FOR ASSESSMENT YEAR 2012-13, WHEREIN THE ASSESSEE HAS SHOWN REVENUE FROM OPERATION OF RS. 31,65,047/- AND OTHER INCOME AT RS. 19,50,000/- IS PLACED ON RECORD. THE ASSESSING OFFI CER HAS NOT BROUGHT ANY CONTRARY FACT ON RECORD TO DISCARD THE EVIDENCES FU RNISHED BY THE ASSESSEE. 7. FROM THE FINANCIAL STATEMENT FURNISHED BY ASSESSEE FOR SUBSEQUENT YEAR WHEN THE ASSESSEE HAS REVISED ITS OPERATION AND HAS SHOWN THE POSITIVE INCOME. THE DOCUMENTARY EVIDENCES FURNISHED BY ASSE SSEE GO TO SHOW THAT THE ASSESSEE HAS STARTED ITS BUSINESS ACTIVITY AND THE CONTENTIONS OF ASSESSEE THAT THERE WAS TEMPORARY LULL IN THE BUSIN ESS ARE CORRECT. CONSIDERING THE DECISION OF CO-ORDINATE BENCH IN CI T VS. KING PRAWANS LTD. THAT NO DISALLOWANCE ON ACCOUNT OF TEMPORARY L ULL IN THE BUSINESS IS PERMISSIBLE. THEREFORE, THE GROUND NO. 1TO 3 OF APP EAL RAISED BY ASSESSEE IS ALLOWED. ITA NO. 6284 MUM 2012-M/S KUMAR WIRE CLOTH MANUFACTURING CO . LTD. 6 8. GROUND NO.4 RELATES TO ADDITION ON ACCOUNT OF PROVI SION OF SALE TAX. THE LD. AR OF THE ASSESSEE SUBMITS THAT ASSESSEE HAS NO T CLAIMED EXPENSES IN THE BOOKS OF ACCOUNT IN THE COMPUTATION OF INCOME. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHO RITIES BELOW. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PARI TIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER NOTED THAT THE AS SESSEE HAS SHOWN THE OUTSTANDING SALE TAX LIABILITY OF RS. 2.31 CORE. TH E ASSESSEE WAS ASKED TO PROVIDE BREAK-UP OF THE OUTSTANDING DUES. THE ASSES SEE FILED ITS REPLY AND FURNISHED THE COPY OF STATEMENT OF BOARD OF ANNUAL FINANCE AND RECONSTRUCTION (BIFR) DATED 21.08.2010. AFTER PERUS ING THE STATEMENT FURNISHED BY ASSESSEE. THE ASSESSING OFFICER CONCLU DED THAT THE ASSESSEE HAS INFLATED A LIABILITY AND NOT EXPLAINED RELIABIL ITY. ACCORDINGLY, A PROVISION OF RS. 89,10,570/- WAS ADDED UNDER SECTIO N 68 OF THE ACT. THE LD. CIT(A) CONFIRMED THE ADDITION ON HIS OBSERVATIO N THAT NO EVIDENCE IS PLACED ABOUT THE DISCREPANCY OF RS. 89,10,570/- WHI CH AROSE DUE TO TWO DIFFERENT SET OF FIGURES FURNISHED BY ASSESSEE. 10. WE HAVE NOTED THAT THE ASSESSEE HAS NOT CLAIMED LIA BILITY IN ASSESSMENT YEAR 2004-05 TO 2008-09. EVEN IN THE ASSESSMENT YEA R UNDER CONSIDERATION, THE ASSESSEE HAS EXCLUDED THE INTERE ST ON SALE TAX FROM THE COMPUTATION. WE HAVE ALSO SEEN THE PROFIT & LOSS AC COUNT FOR THE YEAR ENDED ON 31.03.2008, WHEREIN THE ASSESSEE HAS NOT C LAIMED THE SALE TAX ITA NO. 6284 MUM 2012-M/S KUMAR WIRE CLOTH MANUFACTURING CO . LTD. 7 LIABILITY. THUS, NO DISALLOWANCE OF ITEM WHICH IS N OT CLAIMED IS WARRANTED. THUS, GROUND NO.4 OF THE APPEAL IS ALLO WED. 11. GROUND NO.5 RELATES TO CESSATION OF LIABILITY. THE LD. AR OF THE ASSESSEE SUBMITS THAT ASSESSEE MADE THE SETTLEMENT WITH BANK AND GOT THE REMISSION OF LIABILITY WHICH INCLUDED INTEREST DUE TO OLD TER M LOAN AND INTEREST THEREON. THE CESSATION OF LIABILITY BY BANK ON ONE TIME SETTLEMENT IS A CAPITAL RECEIPT IN THE HAND OF ASSESSEE AND THE SAM E IS NOT TAXABLE AS REVENUE RECEIPT. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION BOMBAY HIGH COURT IN MAHI NDRA & MAHINDRA LTD VS CIT 261 ITR 501(BOM), HONBLE SUPREME COURT IN INDIAN CEMENT LTD VS CIT(1966) 60 ITR 52 (SC), DELHI HIGH COURT I N CIT VS TOSHA INTERNATIONAL LTD (2009) 176 TAXMAN 187 (DELHI), AC CELERATED FREEZ & DRYING CO LTD VS DCIT (2009) 31 SOT 442( COCHIN) A ND TRIBUNAL IN CIT VS. KING PRAWANS LTD. 12. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF AUTHORITIES BELOW. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE ASSESSMENT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS PAID RS. 60,00,000/- TO KARNATAKA BANK LTD ON ACCOUNT OF ON TIME FULL AND F INAL SETTLEMENT AGAINST THE OUTSTANDING LIABILITY OF RS. 3,07,42,528/- AND THE BALANCE AMOUNT OF RS. 2,47,52,200/- WAS TREATED AS CAPITAL RESERVE. T HE ASSESSEE WAS SHOW ITA NO. 6284 MUM 2012-M/S KUMAR WIRE CLOTH MANUFACTURING CO . LTD. 8 CAUSED AS TO WHY DISALLOWANCE OF SUCH AMOUNT BE NOT MADE. THE ASSESSEE FILED ITS REPLY DATED 13/12/2010 AND RELIED ON THE VARIOUS DECISIONS VIZ; MAHINDRA & MAHINDRA LTD VS CIT 261 ITR 501(BOM), SO LID CONTAINER VS DCIT (2009)(308 ITR 417 (BOM), CIT VS TOSHA INTE RNATIONAL LTD (2009) 176 TAXMAN 187 (DELHI). THE CONTENTION OF TH E ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER HOLDING THAT DISC LOSED THE PURPOSE FOR WHICH THE LOAN WAS UTILIZED AND TREATED THE SAME AS INCOME OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 41(1) RWS 28(IV) O F THE ACT. THE LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER HOLDI NG THAT THE LOAN WAS OBTAINED IN RESPECT OF STOCK IN TRADE OR FOR WORKI NG CAPITAL FOR PURCHASING MATERIAL. 14. THERE IS NOT DISPUTE OF THE FACTS THAT KARNATAKA BA NK HAS ENTERED IN ONE TIME SETTLEMENT OF ITS DUE AND HAS SETTLED ALL THE DUE ON PAYMENTS OF RS. 60.00 LAKHS AS PER ITS LETTER DATED 21.05.2008 (PAG E 62 OF PB). THE ASSESSEE HAS PLACED ON RECORD THE COPY OF RENEWAL O F LOAN WITH ENHANCEMENT CREDIT FACILITY DATED 19.10.200 FOR THE PURPOSE OF WORKING CAPITAL AND PURCHASING THE MACHINERY AND THE REIMBU RSEMENT OF THE CAPITAL ASSET ACQUIRED (PAGE NO.56 OF PB). THE ASSESSEE H AS AVAILED THE LOAN FOR RUNNING ITS BUSINESS IS NO WHERE DISPUTED BY THE LO WER AUTHORITIES. ON SETTLEMENT OF LOAN THE ASSESSEE HAS NOT RECEIVED AN Y THING; RATHER ITS LIABILITY WAS WAIVED BY THE BANKER. ITA NO. 6284 MUM 2012-M/S KUMAR WIRE CLOTH MANUFACTURING CO . LTD. 9 15. IN MAHINDRA & MAHINDRA LTD. V. CIT (SUPRA) THE HONBLE HIGH COURT OF BOMBAY HELD THAT NO ALLOWANCE OR DEDUCTION HAVING B EEN ALLOWED IN RESPECT OF LOAN TAKEN BY ASSESSEE FOR PURCHASE OF C APITAL ASSETS, SECTION 41(1) WAS NOT ATTRACTED TO REMISSION OF PRINCIPAL A MOUNT OF LOAN. 16. WE HAVE NOTED THAT THE HONBLE HIGH COURT OF DELHI , ON IDENTICAL FACTS IN TOSHA INTERNATIONAL LTD (SUPRA) WHILE FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT HELD AS UNDER 2. THE ASSESSEE WAS ENGAGED IN THE MANUFACTURING OF B LACK AND WHITE PICTURE TUBES. THE ASSESSEE-COMPANY RAN INTO HUGE L OSSES AND IT ULTIMATELY BECAME A SICK COMPANY AND REGISTERED WIT H THE BIFR. UNDER THE ONE TIME SETTLEMENT SCHEME, THE FINANCIAL INSTI TUTIONS AND BANKS REQUIRED THE ASSESSEE TO PAY 60 PER CENT OF THE AMO UNT DUE TOWARDS PRINCIPAL AND WAIVED THE ENTIRE INTEREST PAYMENT. T HERE IS NO DISPUTE WITH REGARD TO THE WAIVER OF INTEREST PAYMENT. THE ONLY OBJECTION RAISED BY THE ASSESSING OFFICER IS WITH REGARD TO THE WAIVER OF T HE PRINCIPAL AMOUNT TO THE EXTENT OF RS. 10,47,93,857 WHICH THE ASSESSEE H AD DIRECTLY CREDITED TO THE CAPITAL RESERVE ACCOUNT. ACCORDING TO THE ASSES SING OFFICER THE ASSESSEE HAD DERIVED BENEFIT ON THE BASIS OF EITHER DEPRECIATION OR UTILIZING THE WORKING CAPITAL WHICH WOULD HAVE FORM ED PART OF THE EARLIER YEARS INCOME. ACCORDING TO THE ASSESSING OFFICER SI NCE THE LOANS CEASED TO EXIST, THIS AMOUNTED TO CESSATION OF LIABILITY A ND, THEREFORE, IT HAS TO BE TREATED AS AN INCOME. CONSEQUENTLY, THE ASSESSING O FFICER ADDED THE SAID SUM OF RS. 10.47 CRORES IN THE INCOME OF THE ASSESS EE. THE COMMISSIONER OF INCOME-TAX (APPEALS) DELETED THE ADDITION BY OBS ERVING THAT THE REMISSION OF THE PRINCIPAL AMOUNT OF LOAN DID NOT A MOUNT TO INCOME UNDER SECTION 41(1) NOR UNDER SECTION 28( IV ) NOR UNDER SECTION 2(24) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E 'SAID ACT'). 3. THE REVENUE WENT IN APPEAL BEFORE THE TRIBUNAL AGA INST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) WITH REGARD TO THE DELETION OF THE SAID SUM OF RS 10.47 CRORES. WE NOTE THAT THE TRIBU NAL HAS EXAMINED THE ITA NO. 6284 MUM 2012-M/S KUMAR WIRE CLOTH MANUFACTURING CO . LTD. 10 CASE IN DETAIL AND PARTICULARLY FROM THE STANDPOINT OF THE PROVISIONS OF SECTION 41(1) OF THE SAID ACT. THE TRIBUNAL HAS OBS ERVED AS UNDER: 'AS PER OUR CONSIDERED VIEW, FOR ATTRACTING THE PRO VISIONS OF SECTION 41(1), THE FIRST REQUISITE CONDITION TO BE SATISFIE D IS THAT THE ASSESSEE SHOULD HAVE GOT DEDUCTION OR BENEFIT OF ALLOWANCE I N RESPECT OF LOSS, EXPENDITURE OR TRADING LIABILITY INCURRED BY IT AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR, THE ASSESSEE SHOULD HAVE RECEIVED ANY AMOUNT IN RESPECT OF SUCH LOSS, EXPENDITURE OR TRAD ING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF. THE REMISSIO N WOULD BECOME INCOME ONLY IF THE ASSESSEE HAS CLAIMED DEDUCTION I N RESPECT OF EXPENDITURE OR TRADING LIABILITY. IN MAHINDRA & MAH INDRA LTD. V. CIT [2003] 261 ITR 501 , HON'BLE HIGH COURT OF BOMBAY HELD THAT NO ALLOWANCE OR DEDUCTION HAVING BEEN ALLOWED IN RE SPECT OF LOAN TAKEN BY ASSESSEE FOR PURCHASE OF CAPITAL ASSETS, S ECTION 41(1) WAS NOT ATTRACTED TO REMISSION OF PRINCIPAL AMOUNT OF L OAN. IN THE INSTANT CASE, THE ASSESSEE HAS NOT GOT ANY DEDUCTION ON ACC OUNT OF ACQUISITION OF CAPITAL ASSETS AS THE SAME HAS BEEN REFLECTED IN THE BALANCE SHEET AND NOT IN THE P AND L ACCOUNT, AND A LSO THE REMISSION OF THE PRINCIPAL AMOUNT OF LOAN SO OBTAINED FROM TH E BANK AND FINANCIAL INSTITUTION HAD NOT BEEN CLAIMED AS EXPEN DITURE OR TRADING LIABILITY IN ANY OF THE EARLIER PREVIOUS YEAR. SO F AR AS WAIVER OF INTEREST IS CONCERNED, THE ASSESSEE-COMPANY ITSELF HAS TREATED THE SAME EITHER AS INCOME OR HAS NOT CLAIMED THE SAME A S EXPENDITURE IN THE COMPUTATION OF INCOME FILED BEFORE THE LOWER AU THORITIES.' 4. WE SEE NO REASON TO INTERFERE WITH THE CONCLUSIONS OF THE TRIBUNAL AS THE SAME HAVE BEEN RENDERED ON A CORRECT APPRECIATION OF LAW . THE PRINCIPLES ENUNCIATED IN MAHINDRA & MAHINDRA LTD. V. CIT [2003] 261 ITR 501 (BOM.) ARE FULLY APPLICABLE AND WE SEE NO REASON TO TAKE A DIFFERENT VIEW. 17. CONSIDERING THE DECISION OF HONBLE DELHI AND JURI SDICTIONAL HIGH COURT THE WAIVER OF LIABILITY ON SETTLEMENT OF LOAN IN ON E TIME SETTLEMENT WITH ITA NO. 6284 MUM 2012-M/S KUMAR WIRE CLOTH MANUFACTURING CO . LTD. 11 BANK AND IS TAXABLE AT THE HAND OF THE ASSESSEE. HE NCE, THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/10/2018. SD/- SD/- G.S. PANNU PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 05.10.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR H BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI