Was Correct In Law And Ought Not To Have Been Interfered With Thecommissioner Of Income Tax (Appeals) And The Tribunal. Hecontended That The Assessing Officer H v. Cit[1] Which Has Now Been Upheld By Th

JPP IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 843 OF 2017 The Pr. Commissioner of Income Tax-3,Mumbai.… Appellant V/s. M/s. Vibhadeep Investment & Trading Ltd. ...Respondent Mr. Sham Walve a/w. Pritish Chattergee for the Appellant. CORAM : M.S. SANKLECHA & NITIN JAMDAR, JJ. P.C.:- DATE : 11 SEPTEMBER 2019. The Appellant – Revenue has challenged the order passed by the Income Tax Appellate Tribunal, Mumbai dated 19August 2016 dismissing the Appeal filed by the Appellant. 2.The relevant Assessment Year to which the presentAppeal pertains to is 2008-09. 3.The Appellant – Revenue has presented the followingquestion which according to it is a substantial question of law :- “A.Whether on the facts and in the circumstances ofthe case and in law, the Tribunal was justified indismissing the appeal of the revenue on the issue ofdeletion of addition of Rs.8,41,34,321/-, beingdisallowance of principal amount of loan waived off bythe lender on account of one time settlement of loanwith Mafatlal Finance Company Ltd., holding that theloan was acquired for acquisition/investment of capitalassets as such its waiver cannot be termed as revenuereceipt ? ” 4.The Respondent – Assessee is in business of investmentin shares, bonds and debentures. The Respondent had obtained loanfrom one M/s. Mafatlal Industries Ltd. The Respondent - Revenuehad during the previous year relevant to the Assessment Year enteredinto one time settlement with Mafatlal Finance Co. Ltd. by whichthe principal amount of loan to the extent of Rs.8,41,34,321/-payable by the Respondent was waived off. The Respondent filed itsreturn of income for Assessment Year 2008-09 on 30 September2008 declaring total income at Rs.3,77,24,331/-. The return filed bythe Respondent – Assessee was selected for scrutiny and thestatutory notice to that effect was issued by the Assessing Officer.The Respondent submitted its reply. The Assessing Officer passedan order under Section 143(3) of the Income Tax Act, 1961 on 6October 2010 assessing the total income of the Respondent atRs.12,33,24,300/-. The amounts of Rs.8,41,34,321/- was disallowedbeing waiver of loan on the ground that the waiver of loan amounthad the character of revenue receipt as the liability had ceased. The Assessing Officer accordingly passed the assessment order on 6October 2010 assessing the income at Rs. 12,33,34,300/- after, interalia, disallowing the amount of Rs.8,41,34,321/- as above. 5.The Respondent – Assessee filed an Appeal before theCommissioner of Income Tax (Appeals). The Commissioner(Appeals) by order dated 23 February 2012 upheld the contention ofthe Respondent and observed that the amount of the waiver of loancannot be a revenue receipt making it taxable under Section 28 orunder Section 41 of the Income Tax Act, 1961. However, theCommissioner (Appeals) dismissed the Appeal of the Respondent tothe extent it made a grievance of disallowance of interestexpenditure. The Appellant – Revenue filed appeal to the Tribunalto the extent the Commissioner of Income Tax (Appeal) held thatRs.8,41,34,321/- cannot be added as income. The Respondent fileda cross objection before the Tribunal to the extent interest ofRs.14,65,654/- was disallowed. 6.The Tribunal by the impugned order dated 19 August2016 dismissed both the Appeal of the Revenue and Cross Objectionof the Respondent. This by upholding the view of Commissioner ofIncome Tax (Appeals). 7.Mr. Walve, the learned Counsel for the Appellant -Revenue contended that the order passed by the Assessing Officer was correct in law and ought not to have been interfered with theCommissioner of Income Tax (Appeals) and the Tribunal. Hecontended that the Assessing Officer had justifiably made theaddition of Rs.8,41,34,321/- as it was a revenue receipt. 6.The Tribunal by the impugned order dated 19 August2016 dismissed both the Appeal of the Revenue and Cross Objectionof the Respondent. This by upholding the view of Commissioner ofIncome Tax (Appeals). 7.Mr. Walve, the learned Counsel for the Appellant -Revenue contended that the order passed by the Assessing Officer was correct in law and ought not to have been interfered with theCommissioner of Income Tax (Appeals) and the Tribunal. Hecontended that the Assessing Officer had justifiably made theaddition of Rs.8,41,34,321/- as it was a revenue receipt. 8.We have considered the submissions. Both, theCommissioner of Income Tax (Appeals) and the Tribunal, afterconsidering the evidence and the facts on record have rendered afinding of fact that the loan was taken from acquisition of capitalassets. Thus, the waiver of loan being waived off could not be termedas a revenue receipt. Thus, there is a concurrent finding of factrecorded on this count by the Authorities. During the assessmentproceedings the Assessing Officer had asked the Respondent toexplain why the principal amount of Rs.8,41,34,321/- should not beoffered to tax. The Respondent had made submissions that forchargeability under Section 41(1) of the Act, there should have beenactual allowance made in the assessment of the assessee in the earlieryear. The Commissioner of Income Tax (Appeals) and the Tribunalfollowed the decisions of this Court in the case of Mahindra andMahindra Ltd. vs. CIT[1] which has now been upheld by the ApexCourt in Commissioner v/s. Mahindra & Mahindra Ltd.[2. ]The Court,on similar facts had held that on such waiver of loan taken on capitalaccount, neither the Section 41(1) of the Act nor Section 28(iv) ofthe Act, are applicable. Thus, the question is no longer res-integra. 1(2003) 261 ITR 501(Bom)22018(93)Taxmann.com 3222018(93)Taxmann.com 32 On facts, no error or perversity in the factual findings recorded isshown and on law the issue stands concluded by the decision inMahindra & Mahindra. Therefore, the question as proposed doesnot give rise to any substantial question of law. 9.The Appeal is dismissed. NITIN JAMDAR, J. M.S. SANKLECHA, J .