1.Itxa959.12 v. Sundaram Iyengar & Sons Ltd. Reported In (1996) 6 Sc 294 And Distinguished The Judgment In The Case Of Mahindra & Mahindra Ltd. V/S. Commissioner Of Income Ta

sbw *1* IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.959 OF 2012 Commissioner of Income Tax 1-Versus-M/s. Bhor Industries Ltd. ..Appellant ..Respondent ........... Mr. Suresh Kumar for the Appellant. Mr. S. C. Tiwari a/w. Ms. Natasha Mangat for the Respondent. ........... CORAM: S.C. DHARMADHIKARI AND A. A. SAYED, JJ. DATE :- 7[th] NOVEMBER, 2014 P.C.: This Appeal by the Revenue is challenging the order passed by the Income Tax Appellate Tribunal dated 24[th] February, 2012 in Income Tax Appeal No.6494/Mum/2008, that is for assessment year 2004-05. 2]On 8[th] October, 2014, we had granted time to Mr. Suresh Kumar to enable him to obtain the details of certain proceedings and in relation to which similar question is stated to have been dealt with. 3]Apart from producing a copy of the judgment of this Court in the case of Solid Containers Ltd. V/s. Deputy Commissioner of Income Tax, Special Range-1, Mumbai reported in (2009) 308 ITR 417, Mr. Suresh 1/4 Kumar was unable to point out any other case or Appeal. 4]Be that as it may, Mr. Suresh Kumar submits that this Appeal raises a substantial question of law. The question of law is formulated at page 4 of the paper book. Mr. Suresh Kumar submits that the question proceeds on the footing that the applicable provision was section 41(1) of the Income Tax Act and that was rightly invoked by the Revenue. Alternatively and without prejudice, even if the Assessing Officer and the Commissioner recorded a conclusion that the waiver of term loan was not trading liability, yet, there are other provisions under which the benefit or income arising out of such waiver could have been dealt with. Therefore, the Appeal deserves admission. 5]We are unable to agree. The Assessing Officer’s order dated 29[th ]December, 2006 in para 3.3 records that waiver of term loan is not in the present case a trading liability, expenditure or loss as envisaged in section 41(1) of the Income Tax Act. Once this was the footing on which the Assessing Officer proceeded and the only issue raised before the First Appellate Authority and the Tribunal was applicability of section 141(1) of the Income Tax Act, 1961, then, both held that the admitted factual position does not indicate much less demonstrate and prove the applicability of this provision in the Income Tax Act, 1961. There was no other provision pointed out in which loan waiver can be considered as an income received, receivable or accrued as has been held by the Assessing Officer, is the conclusion reached in the order of the First Appellate Authority passed on 29[th] August, 2008. 6]Before the Tribunal, it was fairly argued that the matter could have been looked at in the light of applicability of other provisions particularly because the nature of the understanding and settlement reveals that the waiver resulted in an income to the Assessee. However, we do not find any reference being made to any particular provision of the Income Tax Act, 1961. The argument is restricted to applicability of this provision as is apparent from a reading of paras 7 to 10 of the order of the Tribunal. Mr. Suresh Kumar tried his best to persuade us to admit this Appeal because of the alternate submission canvassed and which in his opinion was not argued and considered by the First Appellate Authority as well as the Tribunal. In that to derives assistance from the judgment in Solid Containers (supra). Here also, we are unable to agree with Mr. Suresh Kumar because in Solid Containers the Assessee had taken a loan during the previous year for business purposes which was written back in the relevant assessment year. That was because of the consent terms arrived at with the creditor of the Assessee. The Assessee turned around and claimed that the loan was a capital receipt and hence, would not come within the purview of section 41(1). This contention of the Assessee was throughout rejected because the amount was borrowed for business purpose and was thus, a trading liability. That was subject matter of the consent terms between the Assessee and its creditor. The terms resulted in the Assessee being relieved from the obligation to pay the money which was admittedly due and payable and as a trading liability. That is how he wrote back or had written off the balance. That was taken as a credit balance in his books and was being dealt with as an income directly arising out of business activity and liable to tax under section 28. Thus, in these admitted facts and circumstances that the Division Bench applied the principle in the case of Commissioner of Income Tax V/s. T. V. Sundaram Iyengar & Sons Ltd. reported in (1996) 6 SC 294 and distinguished the judgment in the case of Mahindra & Mahindra Ltd. V/s. Commissioner of Income Tax reported in (2003) 261 ITR 501. We do not see how the judgment in Solid Containers (supra) can render any assistance to Mr. Suresh Kumar and enable us to entertain this Appeal. The Appeal is, therefore, dismissed. No costs. (A. A. SAYED, J.) (S.C. DHARMADHIKARI, J.) wadhwas 4/4