ITO, Ward-2(4), Hyderabad, Hyderabad V. Tini Pharma Ltd., Hyderabad, Hyderabad

ITA 669/HYD/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2995 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-05-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 09-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Keywords: Capital asset; Business income; Depreciation; Capital receipt
• Section: 143(3); 142(1); 147; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 669/HYD/2016 ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER, WARD 2(4), HYDERABAD. VS. TINI PHARMA LTD., HYDERABAD. PAN AAACT 7976K (APPELLANT) (RESPONDENT) REVENUE BY : SMT. N. SWAPNA ASSESSEE BY : SHRI PVSS PRASAD DATE OF HEARING 10/05/2018 DATE OF P RONOUNCEMENT 23/05/2018 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 29/01/2016 OF CIT(A) 2, HYDERABAD FOR AY 20 07-08. 2. BRIEFLY THE FACTS OF THE CASE ARE, ASSESSEE COMP ANY, ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF BULK DRUGS AND PHARMACEUTICAL FORMULATIONS, FILED ITS RETURN OF IN COME FOR THE AY 2007-08 ON 28/10/2007 DECLARING LOSS OF RS. 1,54,71 ,478/-. THE AO COMPLETED THE ASSESSMENT U/S 143(3) RWS 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) BY TREATING THE WAIVER OF THE LOAN AMOUNT OF RS. 4,78,30,167/- AS BUSINESS INCOME AND ADDED THE SAME TO THE LOSS RETURNED. 2.1 THE ASSESSEES CASE WAS REOPENED U/S 147 TO VER IFY THE TAXABILITY OF CESSATION OF LIABILITY CONSEQUENT TO ONE TIME SETTLEMENT 2 ITA NO. 669/HYD/16 TINI PHARMA LTD. WITH THE BANK AND ALSO THE CLAIM OF LOSS. IN RESPON SE TO THE NOTICE U/S 148, THE ASSESSEE FILED RETURN ON 25/10/2011. IN RE SPONSES TO THE NOTICES U/S 143(2) AND 142(1) OF THE ACT, ASSESSEE S AR FURNISHED THE INFORMATION CALLED FOR. 2.2 FROM THE INFORMATION PROVIDED, THE AO NOTICED T HAT THE LOAN OF RS. 1,21,15,341/- AND RS. 7,67,14,826/- WAS OUTSTAN DING TOWARDS PACKING CREDIT AND WORKING CAPITAL RESPECTIVELY. TH E ASSESSEE DURING THE FY RELEVANT TO AY UNDER CONSIDERATION, NEGOTIAT ED ONE TIME SETTLEMENT WITH CATHOLIC SYRIAN BANK AS PER WHICH A SSESSEE AGREED TO PAY RS. 4,10,00,000 IN FULL SETTLEMENT OF LOANS. THIS AMOUNT CONSTITUTES RS. 1,41,84,263 TOWARDS PRINCIPAL AND R S. 2,68,15,737/- TOWARDS INTEREST. THE AO OBSERVED THAT AS PER ASSE SSEES BOOKS THE OUTSTANDING PAYABLE TO CATHOLIC SYRIAN BANK IS RS. 8,88,30,167/- AND ON ACCOUNT OF ONE TIME SETTLEMENT FOR RS. 4,10,00,0 00/- THE ASSESSEE COMPANY CLOSED THE BALANCE AMOUNT OF RS. 4,78,30,16 7/- BY TRANSFERRING THE SAME TO CAPITAL RESERVE. THE ASSES SEE ARGUED THAT THE LOANS OBTAINED AND OUTSTANDING WERE ON CAPITAL ACCOUNT AND DO NOT REPRESENT ANY TRADING RECEIPT. 2.3 THE AO REJECTED THE SUBMISSION OF THE ASSESSEE ON THE GROUND THAT ONE TIME SETTLEMENT WITH THE BANK BROUGHT ABOU T CESSATION OF LIABILITY AND HENCE IT IS A TRADING INCOME. FOR THI S, HE RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF ROLLATAINERS LTD. VS. CIT, ITA NO. 127 OF 2011. ACCORDINGLY, THE LOAN WAIVER BENEFIT OF RS. 4,78,30,167/- INCLUDING INTEREST WAS BROUGHT TAX U/S 41(1) BY THE AO. 3. AGGRIEVED WITH THE ABOVE ORDER, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE CIT(A). 4. THE CIT(A) DIRECTED THE AO TO DELETE THE LOAN WA IVER BENEFIT BY HOLDING THAT THE LOAN WAIVER IS ONLY ON CAPITAL ACC OUNT AND HENCE 3 ITA NO. 669/HYD/16 TINI PHARMA LTD. CANNOT BE BROUGHT TO TAX AS TRADING RECEIPT AND THE AO IS NOT CORRECT IN TREATING THE SAID AMOUNT AS INCOME U/S 41(1) AS THE ASSESSEE HAD NOT CLAIMED THE EXPENDITURE OF THE AMOUNT FOR ANY O F THE EARLIER YEARS, THEREFORE, THE PROVISIONS OF SECTION 41(1) ARE NOT APPLICABLE. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(A) WAS RIGHT IN HOLDING THAT THE AMOUNT REPRESE NTING THE PRINCIPAL LOAN AMOUNT WAIVED BY THE BANK UNDER THE ONE TIME SETTLEMENT SCHEME WHICH THE ASSESSEE RECEIVED DURIN G THE COURSE OF ITS BUSINESS IS NOT EXIGIBLE TO TAX. 2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE CIT (A) OUGHT TO HAVE SEEN THAT THE WAIVER OF P RINCIPAL AMOUNT WOULD CONSTITUTE INCOME FALLING UNDER SECTIO N 28(IV) OF THE INCOME TAX ACT BEING THE BENEFIT ARISING FOR TH E BUSINESS? 3) WITHOUT PREJUDICE TO THE ABOVE, WHETHER ON THE F ACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) IS JUSTI FIED IN HOLDING THAT THE LOAN AMOUNT IS ONLY ON CAPITAL ACCOUNT AND HENCE CANNOT BE BROUGHT TO TAX AS TRADING RECEIPT IN LIGH T OF THE FACT THAT THE ASSESSEE UTILIZED THE LOAN AMOUNT TO ACQUI RE FIXED ASSETS AND CLAIMING DEPRECIATION THEREON IS NOT A B ENEFIT OR PERQUISITE TAXABLE U/S 28(IV) OF THE ACT.' 6. THE LD. DR SUBMITTED THAT THE CIT(A) IS NOT JUST IFIED IN HOLDING THAT THE LOAN AMOUNT IS ONLY CAPITAL ACCOUNT AND HE NCE CANNOT BE BROUGHT TO TAX AS TRADING RECEIPT. HE RELIED ON TH E DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. RA MANIYAM HOMES (P) LTD., 68 TAXMANN.COM 289 (MADRAS). 7. THE LD. AR, ON THE OTHER HAND, SUBMITTED THAT FO R APPLICABILITY OF SECTION 41, THERE SHOULD BE AN ALLOWANCE OR DEDUCTI ON CLAIMED BY THE ASSESSEE IN ANY ASSESSMENT FOR ANY YEAR IN RESPECT OF LOSS, EXPENDITURE OR TRADING LIABILITY INCURRED BY THE AS SESSEE. THEN, SUBSEQUENTLY, DURING ANY PREVIOUS YEAR, IF THE CRED ITOR REMITS OR WAIVES ANY SUCH LIABILITY, THEN ONLY THE ASSESSEE W ILL BE LIABLE TO PAY 4 ITA NO. 669/HYD/16 TINI PHARMA LTD. TAX UNDER SECTION 41 OF THE IT ACT. FURTHER, HE SUB MITTED THAT THE OBJECTIVE BEHIND THIS SECTION IS TO ENSURE THAT THE ASSESSEE DOES NOT GET AWAY WITH A DOUBLE BENEFIT ONCE BY WAY OF DEDUC TION AND ANOTHER BY NOT BEING TAXED ON THE BENEFIT RECEIVED BY HIM I N THE LATER YEAR WITH REFERENCE TO DEDUCTION ALLOWED EARLIER IN CASE OF REMISSION OF SUCH LIABILITY. HE ALSO SUBMITTED THAT IT IS AN UND ISPUTED FACT AND IMPORTANT TO NOTE THAT THE SAID INTEREST AMOUNT HAD NOT BEEN DEBITED TO THE PROFIT OR LOSS ACCOUNT IN ANY OF THE ASSESSM ENT YEARS AS THERE IS DIFFERENCE BETWEEN 'TRADING LIABILITY' AND 'OTHE R LIABILITY'. HOWEVER SECTION 41(1) OF THE IT ACT PARTICULARLY DEALS WITH THE REMISSION OF TRADING LIABILITY. WHEREAS IN THE INSTANT CASE, WAI VER OF LOAN AMOUNTS TO CESSATION OF LIABILITY OTHER THAN TRADING LIABIL ITY. REFERRING TO THE ABOVE SUBMISSIONS, THE AR SUBMITTED THAT THE ASSESS EE WOULD NOT FALL U/S 41(1) OF THE ACT. 7.1 REFERRING TO THE GROUNDS OF APPEAL FILED BY THE REVENUE WHEREIN IT WAS MENTIONED THAT WAIVER OF PRINCIPAL AMOUNT WO ULD CONSTITUTE INCOME FALLING U/S 28(IV) OF THE ACT, THE AR REFERR ING TO THE PROVISIONS OF SECTION 28(IV), SUBMITTED THAT IT IS A MATTER OF RECORD THAT THE AMOUNT OF RS. 4,78,30,167/- IS HAVING RECEIVED AS C ASH RECEIPT DUE TO THE WAIVER OF LOAN, THEREFORE, THE VERY FIRST CONDI TION IN THE SECTION ITSELF IS NOT SATISFIED FOR APPLICABILITY OF SECTIO N 28(IV) OF THE ACT. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. MAHINDRA AND MAHINDRA LTD. [ 2018] 93 TAXMANN.COM 32 AND CIT VS. GRAHAM FIRTH STEEL PRODU CTS LTD., 85 TAXMANN.COM 110 (BOMBAY). FURTHER, HE RELIED ON THE FOLLOWING CASES: 1. DCIT VS. KALYANAPUR CEMENT LTD., [2017] 83 TAXMA NN.COM 344 2. CIT VS. XYLON HOLDINGS (P.) LTD., 26 [2012] 26 T AXMANN.COM 333 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE DECISIONS CITED. THE ASSESSEE COMPANY GOT WAIVER OF THE LOAN AMOUNT OF RS. 4,78,30,167/- FROM THE CATHOLIC 5 ITA NO. 669/HYD/16 TINI PHARMA LTD. SYRIAN BANK, WHICH WAS TRANSFERRED TO CAPITAL RESER VE IN ITS BOOKS OF ACCOUNT. THE AO TREATED THE SAID AMOUNT AS TRADING RECEIPT AND BROUGHT IT TO TAX U/S 41(1) OF THE ACT. THE CIT(A) DIRECTED THE AO TO DELETE THE SAME AS IT IS NOT INCOME CHARGEABLE TO T AX WHICH IS CAPITAL IN NATURE. IN THIS CONNECTION, WE REFER TO THE FOLL OWING DECISIONS, ON WHICH RELIANCE PLACED BY THE ASSESSEE, WHEREIN, SIM ILAR ISSUE WAS DEALT BY THE HONBLE COURTS: 8.1 IN THE CASE OF CIT VS. GRAHAM FIRTH STEEL PRODU CTS (I) LTD., [2017] 85 TAXMANN.COM 110 (BOMBAY), THE HONBLE BOM BAY HIGH COURT HAS HELD AS UNDER: 29. THE DIVISION BENCH IN MAHINDRA & MAHINDRA HELD THAT THE ASSESSEE HAS NOT RECEIVED ANY BENEFIT OR PERQUISITE IN KIND WHICH COULD BE VALUED AND IN ANY EVENT SUCH BENEFIT SHOULD BE IN THE NATURE OF INCOME. THE DIVISION BENCH NOTED T HAT THE LOAN WAS ADVANCED TO THE ASSESSEE MAHINDRA AND MAHINDRA, THE ASSESSEE PAID INTEREST AT 6% PER ANNUM FOR TEN YEAR S BEING THE PERIOD OF CONTRACT, AND IT NEVER GOT DEDUCTIONS FOR PAYMENT OF INTEREST UNDER SECTION 36(1)(III) OR UNDER SECTION 37 OF THE ACT. THE DIVISION BENCH HELD THAT THERE WAS A WAIVER OF THE PRINCIPAL AMOUNT AND NOT THE INTEREST. IN THAT CASE ALSO THE ASSESSING OFFICER HELD THAT WHEN THERE WAS A WAIVER OF THE LO AN, THE CREDITS BECAME PART OF BUSINESS INCOME AND THAT PRI OR TO SUCH WAIVER, THEY REPRESENTED LIABILITY. HERE ALSO THESE ARE THE FINDINGS AND OVERLOOKING THE ASPECT OF PAYMENT OF I NTEREST WHICH HAS NOT BEEN WAIVED AND IN REGARD TO WHICH NO RELIEF WAS CLAIMED. THE LOAN AGREEMENT, IN ITS ENTIRETY, WAS N OT OBLITERATED IN THE PRESENT CASE AS WELL. THEREFORE, WE ARE OF T HE OPINION THAT IN THE PRESENT CASE SECTION 28(IV) WAS NOT ATT RACTED.' 8.2 IN THE CASE OF CIT VS SANTOGEN SILK MILLS LTD [ 2015]57 TAXMANN.COM 208 (BOMBAY), THE HONBLE BOMBAY HIGH C OURT HAS HELD AS UNDER: '11. IT IS THIS ORDER OF THE FIRST APPELLATE AUTHOR ITY WHICH WAS CHALLENGED BY THE REVENUE IN APPEAL BEFORE THE TRIB UNAL. THE ARGUMENT OF BOTH SIDES HAVE BEEN REFERRED IN DETAIL S IN PARAGRAPH 6 OF THE TRIBUNAL'S ORDER AND IT HAS HELD THAT ON PERUSAL OF THE LOAN AGREEMENT INSOFAR AS LOAN FROM ADCB BANK IS CONCERNED (SUBJECT MATTER AND PART OF THIS APPEA L) THAT WAS FOR PURCHASING MACHINERY AND AVAILED BY THE ASSESSE E. AS FAR AS LOAN FROM ADCB IS CONCERNED, IT WAS CONCEDED THA T THE SAME WAS AGAINST HYPOTHECATION OF STOCK AND NOT A T ERM LOAN. 6 ITA NO. 669/HYD/16 TINI PHARMA LTD. WE ARE NOT CONCERNED WITH THAT PART OF THE ORDER OF THE TRIBUNAL, HOWEVER, IT IS MATERIAL TO NOTE THAT THE TRIBUNAL D ISALLOWED THE CLAIM MADE BY THE ASSESSEE AND HELD THAT AS FAR AS ADCB IS CONCERNED, THE WAIVER OF THE PRINCIPAL AMOUNT WOULD HAVE TO BE CONSTRUED AS TAXABLE INCOME. HOWEVER, AS FAR AS ICI CI BANK IS CONCERNED, IT WAIVED THE PRINCIPAL AMOUNT OF RS. 3. 06 CRORES THAT WAS NOT FOR CARRYING ON ANY BUSINESS ACTIVITY BUT TO ACQUIRE THE CAPITAL ASSETS. THIS COURT HAS CONSISTENTLY TAK EN A VIEW THAT THE LOAN AMOUNT WRITTEN OFF WOULD NOT COME WITHIN T HE PURVIEW OF SECTION 28(IV) OF THE INCOME TAX ACT. THE VIEW T AKEN BY THIS COURT IN THE CASE OF MAHINDRA & MAHINDRA LTD. V. CI T [2003] 261 1TR 501/128 TAXMAN 394 AND SOLID CONTAINERS LTD . V. DY. CIT [2009] 308 ITR 417/178 TAXMAN 192 (BAM.) WOULD ENABLE THE TRIBUNAL AND EQUALLY US TO CONCLUDE THAT THE LO AN WRITTEN OFF WOULD NOT BE TAXABLE UNDER SECTION 28(IV) OF THE AC T. THAT ISSUE SPECIFICALLY CAME UP FOR CONSIDERATION IN THE MATTE R OF MAHINDRA .AND MAHINDRA AND IT WAS HELD THAT THE SAID PROVISI ON WOULD APPLY ONLY WHEN A BENEFIT OR PERQUISITE IS RECEIVED IN KIND AND HAS NO APPLICATION WHERE BENEFIT IS RECEIVED IN CAS H OR MONEY. FOLLOWING THIS DECISION IN THE CASE OF CIT V. XYLON HOLDINGS (P.) LTD. [2012J 211 TAXMAN 108/26 TAXMANN.COM 333 (BAM. ) THIS COURT HELD THAT THE WAIVER WOULD NOT COME WITHIN TH E PURVIEW OF SECTION 28(IV) OF THE INCOME TAX ACT. HAVING PERUSE D THIS DECISION AND IN THE PECULIAR FACTS AND CIRCUMSTANCE S OF THE PRESENT CASE WE ARE OF THE VIEW THAT THE TRIBUNAL H AS RIGHTLY UPHELD THE ORDER OF THE COMMISSIONER. IT HAS CONCLU DED THAT THE FACTUAL AND LEGAL POSITION ENABLES IT TO HOLD THAT THE DIRECTION OF THE FIRST APPELLATE AUTHORITY CANNOT BE SAID TO BE PERVERSE. THE VIEW TAKEN BY HIM AS TERMED BY THE TRIBUNAL IS RATI ONAL AND JUDICIOUS. MORE SO, WHEN THE ASSESSEE COMPANY IS A BIFR UNIT AND IT IS IN THE PROCESS OF REVIVAL, THEREFORE, THE BANKS WAIVED LOAN AS WELL AS INTEREST COMPONENT DUE FROM THE ASS ESSEE. EQUALLY, THE LOAN SANCTIONED BY ADCB AND SUBSEQUENT LY WAIVED OFF HAS ALSO BEEN OFFERED TO TAX. IT IS ONLY IN THE ICICI BANK'S CASE THAT THE TRIBUNAL TOOK THE ABOVE VIEW AND WHIC H WE DO NOT FIND AS PERVERSE OR VITIATED BY A ERROR OF LAW APPA RENT ON THE FACE OF RECORD. AS A RESULT OF THE ABOVE DISCUSSION , THE APPEAL FAILS AND IS DISMISSED. THERE WILL BE NO ORDER AS T O COSTS.' 8.3 IN THE CASE OF CIT VS. SANTOGEN SILK MILLS LTD. , [2015] 57 TAXMANN.COM 208 (BOMBAY), THE HONBLE HIGH COURT OF BOMBAY HAS HELD AS UNDER: 11. IT IS THIS ORDER OF THE FIRST APPELLATE AUTHORI TY WHICH WAS CHALLENGED BY THE REVENUE IN APPEAL BEFORE THE TRIB UNAL. THE ARGUMENT OF BOTH SIDES HAVE BEEN REFERRED IN DETAIL S IN PARAGRAPH 6 OF THE TRIBUNAL'S ORDER AND IT HAS HELD THAT ON PERUSAL OF THE LOAN AGREEMENT INSOFAR AS LOAN FROM ICICI BANK 7 ITA NO. 669/HYD/16 TINI PHARMA LTD. IS CONCERNED (SUBJECT MATTER AND PART OF THIS APPEA L) THAT WAS FOR PURCHASING MACHINERY AND AVAILED BY THE ASSESSE E. AS FAR AS LOAN FROM ADCB IS CONCERNED, IT WAS CONCEDED THA T THE SAME WAS AGAINST HYPOTHECATION OF STOCK AND NOT A T ERM LOAN. WEARE NOT CONCERNED WITH THAT PART OF THE ORDER OF THE TRIBUNAL, HOWEVER, IT IS MATERIAL TO NOTE THAT THE TRIBUNAL D ISALLOWED THE CLAIM MADE BY THE ASSESSEE AND HELD THAT AS FAR AS ADCB IS CONCERNED, THE WAIVER OF THE PRINCIPAL AMOUNT WOULD HAVE TO BE CONSTRUED AS TAXABLE INCOME. HOWEVER, AS FAR AS ICI CI BANK IS CONCERNED, IT WAIVED THE PRINCIPAL AMOUNT OF RS. 3. 06 CRORES THAT WAS NOT FOR CARRYING ON ANY BUSINESS ACTIVITY BUT TO ACQUIRE THE CAPITAL ASSETS. THIS COURT HAS CONSISTENTLY TAK EN A VIEW THAT THE LOAN AMOUNT WRITTEN OFF WOULD NOT COME WITHIN T HE PURVIEW OF SECTION 28(IV) OF THE INCOME TAX ACT. THE VIEW T AKEN BY THIS COURT IN THE CASE OF MAHINDRA & MAHINDRA LTD. V. CI T [2003] 261 ITR 5011128 TAXMAN 394 AND SOLID CONTAINERS LTD . V. DY. CIT [2009] 308 ITR 417/178 TAXMAN 192 (BORN.) WOULD ENABLE THE TRIBUNAL AND EQUALLY US TO CONCLUDE THAT THE LO AN WRITTEN OFF WOULD NOT BE TAXABLE UNDER SECTION 28(IV) OF THE AC T. THAT ISSUE SPECIFICALLY CAME UP FOR CONSIDERATION IN THE MATTE R OF MAHINDRA AND MAHINDRA AND IT WAS HELD THAT THE SAID PROVISIO N WOULD APPLY ONLY WHEN A BENEFIT OR PERQUISITE IS RECEIVED IN KIND AND HAS NO APPLICATION WHERE BENEFIT IS RECEIVED IN CAS H OR MONEY. FOLLOWING THIS DECISION IN THE CASE OF CIT V. XYLON HOLDINGS (P.) LTD. [2012] 211 TAXMAN 108/26 TAXMANN.COM 333 (BORN .) THIS COURT HELD THAT THE WAIVER WOULD NOT COME WITHIN TH E PURVIEW OF SECTION 28(IV) OF THE INCOME TAX ACT. HAVING PERUSE D THIS DECISION AND IN THE PECULIAR FACTS AND CIRCUMSTANCE S OF THE PRESENT CASE WE ARE OF THE VIEW THAT THE TRIBUNAL H AS RIGHTLY UPHELD THE ORDER OF THE COMMISSIONER. IT HAS CONCLU DED THAT THE FACTUAL AND LEGAL POSITION ENABLES IT TO HOLD THAT THE DIRECTION OF THE FIRST APPELLATE AUTHORITY CANNOT BE SAID TO BE PERVERSE. THE VIEW TAKEN BY HIM AS TERMED BY THE TRIBUNAL IS RATI ONAL AND JUDICIOUS. MORE SO, WHEN THE ASSESSEE COMPANY IS A BIFR UNIT AND IT IS IN THE PROCESS OF REVIVAL, THEREFORE, THE BANKS WAIVED LOAN AS WELL AS INTEREST COMPONENT DUE FROM THE ASS ESSEE. EQUALLY, THE LOAN SANCTIONED BY ADCB AND SUBSEQUENT LY WAIVED OFF HAS ALSO BEEN OFFERED TO TAX. IT IS ONLY IN THE ICICI BANK'S CASE THAT THE TRIBUNAL TOOK THE ABOVE VIEW AND WHIC H WE DO NOT FIND AS PERVERSE OR VITIATED BY A ERROR OF LAW APPA RENT ON THE FACE OF RECORD. AS A RESULT OF THE ABOVE DISCUSSION , THE APPEAL FAILS AND IS DISMISSED. THERE WILL BE NO ORDER AS T O COSTS. 8.4 IN THE CASE OF CIT VS. XYLON HOLDINGS (P) LTD., [2012] 26 TAXMANN.COM 333 (BOM.), THE BOMBAY HIGH COURT HAS H ELD AS UNDER: 8 ITA NO. 669/HYD/16 TINI PHARMA LTD. 8. WE HAVE CONSIDERED THE SUBMISSIONS. THE ISSUE A RISING IN THIS CASE STAND COVERED BY THE DECISION OF THIS COU RT IN THE MATTER OF MAHINDRA & MAHINDRA LTD. (SUPRA ). THE DE CISION OF THIS COURT IN THE MATTER OF SOLID CONTAINERS LTD. ( SUPRA) IS ON COMPLETELY DIFFERENT FACTS AND INAPPLICABLE TO THIS CASE. IN THE MATTER OF SOLID CONTAINERS LTD. (SUPRA ) THE ASSESS EE THEREIN HAD TAKEN A LOAN FOR BUSINESS PURPOSE. IN VIEW OF T HE CONSENT TERMS ARRIVED AT, THE AMOUNT OF LOAN TAKEN WAS WAIV ED BY THE LENDER. THE CASE OF THE ASSESSEE THEREIN WAS THAT T HE LOAN WAS A CAPITAL RECEIPT AND HAS NOT BEEN CLAIMED AS DEDUC TION FROM THE TAXABLE INCOME IN THE EARLIER YEARS AND WOULD N OT COME WITHIN THE PURVIEW OF SECTION 41 (1) OF THE ACT. HO WEVER, THIS COURT BY PLACING RELIANCE UPON THE DECISION OF THE APEX COURT IN THE MATTER OF CIT V. T. V SUNDARAM IYENGAR & SONS L TD. [1996] 222 ITR 344 / 88 TAXMAN 429 HELD THAT THE LOAN WAS RECEIVED BY THE ASSESSEE FOR CARRYING ON ITS BUSINESS AND TH EREFORE, NOT A LOAN TAKEN FOR THE PURCHASE OF CAPITAL ASSETS. CO NSEQUENTLY, THE DECISION OF THIS COURT IN THE MATTER OF MAHINDR A & MAHINDRA LTD. (SUPRA) WAS DISTINGUISHED AS IN THE SAID CASE THE LOAN WAS TAKEN FOR THE PURCHASE OF CAPITAL ASSETS AND NOT FO R TRADING ACTIVITIES AS IN THE CASE OF SOLID CONTAINERS LTD. (SUPRA). IN VIEW OF THE ABOVE, THE DECISION OF THIS COURT IN-THE MAT TER OF SOLID CONTAINERS LTD. (SUPRA) WILL HAVE NO APPLICATION TO THE FACTS OF THE PRESENT CASE AND THE MATTER STANDS COVERED BY T HE DECISION OF THIS COURT IN THE MATTER OF MAHINDRA & MAHINDRA LTD. ( SUPRA). THE ALTERNATIVE SUBMISSION THAT THE AMOUNT OF LOAN WRITTEN OFF WOULD BE TAXABLE UNDER SECTION 28(IV) OF THE ACT AL SO CAME UP FOR CONSIDERATION BEFORE THIS COURT IN THE MATTER O F MAHINDRA & MAHINDRA LTD. ( SUPRA) AND IT WAS HELD THEREIN THAT SECTION 28(IV) OF THE ACT WOULD APPLY ONLY WHEN A BENEFIT O R PERQUISITE IS RECEIVED IN KIND AND HAS NO APPLICATION WHERE BE NEFIT IS RECEIVED IN CASH OR MONEY. 8.5 FOLLOWING THE RATIOS LAID DOWN IN THE AFORESAID CASES, WE UPHOLD THE ORDER OF THE CIT(A) IN DIRECTING THE AO TO DELE TE THE ADDITION OF RS. 4,78,30,167/- MADE BY THE AO ON ACCOUNT OF WAIV ER OF THE LOAN AMOUNT TREATING IT AS CAPITAL IN NATURE AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 23 RD MAY, 2018. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 23 RD MAY, 2018 9 ITA NO. 669/HYD/16 TINI PHARMA LTD. KV COPY TO:- 1) ITO, WARD 2(4), ROOM NO. 509, 5 TH FLOOR, SIGNATURE TOWERS, KOTHAGUDA JUNCTION, KONDAPUR, HYDERABAD. 2) M/S TINI PHARMA LTD., 415, ADITYA ENCLAVE, AMEER PET, HYD. 3) CIT(A) 2, HYDERABAD. 4) PR. CIT - 2, HYD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE