Wp/20579/2022 Of M/S. I. G. Petrochemicals Ltd v. The Income-Tax Appellate Tribunal

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 23 DAY OF SEPTEMBER 2023BEFORE THE HON'BLE MR.JUSTICE S. SUNIL DUTT YADAV#WRIT PETITION No.20579 OF 2022 (TIT) #Between: M/s. I.G. Petrochemicals Ltd.,(a Public Limited Company incorporated|under the Companies Act No.1 of 1956).manufacturer of Phthalic Anhydride D-4, Jyothi Complex, 134/1, Infantry Road,Bengaluru - 560 001.(PAN: )Represented by itsExecutive DirectorSri Jitendra Kumar SabooAged about 71 years Son of late Vishwanath Saboo| _.. Petitioner (By Sri S. Ganesh, Senior Advocate a/wMs. Jinita Chatterjee, Advocate forSri S.Parthasarathi, Advocate) And 1]The Income-tax Appellate Tribunal, “C" Bench, No.ol, 1 Cross, | 4[tn]‘T) Block East, Tilak Nagar. Jayanagar Bengaluru - 560 041. 2 |The Deputy Commissioner of Income-tax, Circle-3(1)(1),_ Office of the Pr. Commissioner of | Income-tax-3, 5[tn]FIOOr, | BMTC Bullding, 80 Feet Road,6[tn|]Block, Koramangala,Bengaluru - 560 095.6[tn|]Block, Koramangala,Bengaluru - 560 095. ... Respondents. (By Sri E.Il. Sanmathi, Advocate) OR O This Writ Petition Its filled under Articles 226 and 27of Constitution of India, praying to issue a writ of|certiorari or a direction in the nature of writ of certiorari,quashing the order of the Income-tax Appellate Tribunal, cr |Bench,Bangaloredated05.09.7202)InMP.|No.47/Bang/2018 (in ITA No.1317/Bang/2018) for the|Assessment Year 2006-07 (Annexure- F') and etc. This Writ Petition having been heard and reservedon 31.07.2023 and coming on for pronouncement of orders, tnis day, the Court made the following: ORDER The petitioner has sought for setting aside of the.order dated 05.09.2022 at Annexure-'F passed by the|Income Tax Appellate Tribunal “C° Bench, Bangalore in|M.P.No.47/Bang/2022 in ITA No.1317/BANG/2018 forthe Assessment Year 2JOO6-07. $In terms of the saidorder, the Miscellaneous Petition filed by the Assessee|under Section 254(2) of the Income Tax Act, 1961 (I.T.Act for brevity) seeking rectification of the mistake in|the order of Tribunal[+]dated 21.01.2022 came to be'|partly allowed by deleting the paragraph Nos.6, 7 and 8 and substituting the same with fresn paragrapns. (I)BRIEFFACTS 2.|Tne petitioner is stated to nave taken term)loans and working capital loans from Banks and Nad)entered into an One Time Settlement (OTS) with the| aITA No.1317/Bang/2018 for the A.Y.No.2006-07 Banks, whereby portion of the interest charged by the|Bank and also part of the principal amount stood waived. 3While petitioner had offered the waiver of)interest to assessment, Nowever, the waiver of the|principal amount of term loans and working capital loans|was treated to be a capital receipt and was not subjected to tax. 4Tne subject matter of dispute relates to the)Assessment Year JO06-27200/7. 5.|The history of litigation is as follows:- 6.|The order of the Assessing Officer for the|Assessment Year 2006-2007 came to be challenged|before the Commissioner of Income Tax (Appeals) whichconfirmed the order of the Assessing Officer atAnnexure-B’ which was taken up in appeal before the|Income Tax Appellate Tribunal which allowed the appealin part, while holding that waiver of term loan taken for|the purpose of capital assets would not result in any|benefit or perquisite flowing to the assessee which couldbe described to be a revenue receipt and accordingly|would not constitute income of the assessee. However,as regards loans taken in the course of carrying on the|business and where such loans were waived, it would|result in flow back of funds to the assessee which was In|the nature of revenue receipt and hence liable to tax.Accordingly, the Appellate Tribunal has treated the.amount flowing back to the assessee consequent to|waiver of loan relating to day-to-day operation as income. of the assessee under Section 28(iv) of the I.T. Act. For|determination of the nature of loan taken which wouldhave a bearing on the amount that benefits the assesseeupon waiver, the matter was remitted to the Assessing|Officer for reconsideration, while observing that upon|waiver of loans taken in the course of carrying onday-to-day affairs, the amount of loan that was waived|would be treated as income under Section 28(iv) of the|I.7T. Act. 7Miscellaneous Application came to be filed.under Section 254(2) of the I.T. Act contending that ITA|No.1317/2018 ought to have been allowed in its entirety,|that waiver of principal amount of term loans andworking capital loan constituted a capital receipt whichwas not taxable income, that the order of the|Commissioner.Of IncomeTax!(Appeals)for.theAssessment Year JO0O5-2006 had affirmed to the standthat waiver of loans was a capital receipt which was not| taken note of, that the judgment of Apex Court inCommissioner of Income Tax/VVMahindra andsMahindra[2]||Mahindra and Mahindra|] was not takennote of. 8 _The said Miscellaneous Petition came to be.partly allowed while holding that waiver of term loan was|taxable. oiIt is this order that is challenged in the)present Writ Petition not being satisfied with the partial|allowing of Miscellaneous Petition. | 10. Sri E.I.Sanmathi, learned counsel appearingfor the Revenue has objected to the maintainability oftheWritPetitioncontendingthat|theeffectof—rectification of the order would result in a fresh originalorder as against which there is a remedy available under| Section 260A of the I.T. Act to the High Court against the D(2018) 16 SCC 79 : (2018) 404 ITR 0001 SC order passed by the Appellate Tribunal. It is also|submitted that the order passed under Section 254(2) of|the I.T. Act as well would be an appealable order in|terms of Section J60A of the I.T. Act 11. After hearing both sides, the following points.would arise for consideration:- (A) Whether as against the order passed in Miscellaneous Petition under Section. 254(2) of I.T. Act in light of theremedy of appeal being available underSection 260A of I.T. Act, the WritPetition could be entertained?remedy of appeal being available underSection 260A of I.T. Act, the WritPetition could be entertained? (B)Whether.thelawlaiddownIn|Mahindra and Mahindra _ (supra)if taken note of, would result in benefit.in the form of waiver of loan being.construed as monetary benefit and not.covered by Section 28(iv) of the I.T.|Act?Mahindra and Mahindra _ (supra)if taken note of, would result in benefit.in the form of waiver of loan being.construed as monetary benefit and not.covered by Section 28(iv) of the I.T.|Act? (C) What order? ,(II)ANALYSIS (A) Whether as against the order passed InMiscellaneous Petition under Section|254(2) of I.T. Act in light of theremedyOT appealbeing available|under Section 260A of I.T. Act, the.Writ Petition could be entertained? 12. Under section 260A of the I.T. Act, an appeallies to the High Court from “every order passed in appeal|by the Appellate Tribunal”, if the High Court is satisfied|that the case involves a substantial question of law. The|Revenue has taken the stand that the order passed in|the Miscellaneous Petition filed seeking rectification,|would be an order subject to appeal under Section 260A|of the I.T. Act. This position is not seriously disputed by the petitioner, however, it is the contention that mere|existence of an alternative remedy would not|ipso factoamount to a Dar on entertaining a Writ Petition. © 12. Under section 260A of the I.T. Act, an appeallies to the High Court from “every order passed in appeal|by the Appellate Tribunal”, if the High Court is satisfied|that the case involves a substantial question of law. The|Revenue has taken the stand that the order passed in|the Miscellaneous Petition filed seeking rectification,|would be an order subject to appeal under Section 260A|of the I.T. Act. This position is not seriously disputed by the petitioner, however, it is the contention that mere|existence of an alternative remedy would not|ipso factoamount to a Dar on entertaining a Writ Petition. © 13. In the present factual matrix, it needs to benoticed that the petitioner contends that the rectificationapplication filed under Section 254(2) of the I.T. Act|ought to have been allowed in its entirety in light of the.law laid down by the Apex Court in)Mahindra andsMahindra (supra),wherein the Apex Court has heldthat waiver of loan constituted a benefit in the shape of money which was outside the purview of Section 28(iv)|of I.T. Act. Accordingly, it is contended that the Tribunaland subordinate Authorities being bound by such law laid.down, its application did not require any detailed|discussion on facts. It Is contended that the order in|challenge before the Tribunal ought to have been.rectified after taking note of the legal position. | 14. Though learned counsel Sri E.I. Sanmathi has—relied on the Division Bench's judgment of this Court in|L. Sohanraj and others.VVDeputy Commissioner of Income Tax and Another[;][L. SohanJra], affirmingthe order of learned Single Judge[0]and the judgment ofthis Court passed in.Deputy Commissioner of Income.Tax v. H.V. Shantaram['][H.V. Shantaram], Nowever,a close reading of the said judgments and orders do notSupport the proposition of the Revenue. Before the|learned Single Judge in|L. Sohanraj and others v. Deputy Commissioner of Income Tax and another[$]|though the conclusion was that Writ ought not to be|entertained as the petitioners had an_ alternative,effective and efficacious remedy provided under the|statue, however, such conclusion cannot be elevated to |a rule prescribing non-entertaining of Writ Petitions.where alternative remedy is available. In the order|rendered by the learned Single Judge it is observed as/follows:- 3W .A.No.3852-55/2000 dated 03.08.2000 A2003 (260) ITR 147 GSARL) )ITR (260) 2003 156 62003 (260) ITR 147 (KARL) “10. Tne bar relating to alternative remedy|has been a rule of self-imposed limitation ratherthan a rule of law. The existence of alternative|remeay had always been regarded as one ofthe factors wnicn tnis court is required to bearin’ mind while” exercising its discretionarjurisdiction. Ordinarily, the court will notentertain a petition for a writ under article 226of the Constitution, where the petitioner has analternative remedy, wnicn witnout being undulyonerous provides an equally efficacious remedy.The law on tnis point is now well settled... The learned Single Judge further refers to theobservation made by the Apex Court in.ThansinghNathmalVVSuperintendent of Taxes[4]|[Thansingh Natnmal|at para-/7 which reads as follows:- "7, Against the order of the Commissioner an)order for reference could nave Deen claimed ifthe appellants satisfied the Commissioner orthe Hign Court that a question of law arose outof the order. But the procedure provided by the.Act to invoke the jurisdiction of the High Court: 7[1964] 15 STC 468, 474: AIR 1964 SC 1419| The learned Single Judge further refers to theobservation made by the Apex Court in.ThansinghNathmalVVSuperintendent of Taxes[4]|[Thansingh Natnmal|at para-/7 which reads as follows:- "7, Against the order of the Commissioner an)order for reference could nave Deen claimed ifthe appellants satisfied the Commissioner orthe Hign Court that a question of law arose outof the order. But the procedure provided by the.Act to invoke the jurisdiction of the High Court: 7[1964] 15 STC 468, 474: AIR 1964 SC 1419| was by-passed; the appellants moved tne High|Court challenging the competence of theProvincial Legislature to extend the concept ofsale, and invoked tne extraordinary jurisaictionof the Hign Court under article 226 and sougntto reopen the decision of the taxing autnoritieson question of fact. The jurisdiction of the HighCourt under article 2776 of the Constitution Iscouched in wide terms and the exercise thereof.is not subject to any restrictions except theterritorialrestrictions|WNICDNareexpresslyprovided in tne articles. But the exercise of thejurisdiction is discretionary; it is not exercisedmerely because it is lawful to do so. The veryamplitude of the jurisdiction demands that itwill ordinarily be exercised subject to certain|se/f-imposedlimitations.Resorttothatjurisdiction is not intended as an alternativeremedy for relief which may be obtained in asuit or otner mode _ prescribed by _ statuOrdinarily, tne court will not entertain a petitionfor a writ under article 226, where thepetitioner has an alternative remedy, which.without being unduly onerous, provides an.egually efficacious remedy. Again the HignCourt does not generally, enter upon a determination of questions which demand anelaborate examination of evidence to establishthe right to enforce which the writ ts claimed.The Hign Court does not therefore act as acourt of appeal against the decision of a courtor Tribunal, to correct errors of fact, and does|not by assuming Jurisdiction under article 226trencn upon an alternative remeay provided bystatute for obtaining relief. Where it is open tothe aggrieved petitioner to move anotnerTribunal, or even itself in another jurisaictionfor obtaining redress in the manner provided bya Statute, tne Hign Court normally will notpermit by entertaining a petition unaer articie226 of the Constitution the machinery createdunder tne statute to be by-passed, and willleave tne party applying to it to seek resort tothe machinery so set up.” 15. The conclusion of learned Single Judge[#]declining the Writ Petition cannot be read out of context.including reference to the order of the Apex Court in|Thansingh Nathmal (supra)which speaks for itself| SL. Sohanraj & Ors. v. Deputy Commissioner of Income Tax and Another|(supra) and lays down the proposition that the exercise of|jurisdiction of the High Court under Article 226 of the|Constitution of India is couched in wide terms and that|exercise of jurisdiction is discretionary and subject to self.imposed limitations and that where there is redress|provided for under a statute,“the High Court normallywill not permit by entertaining a petition under Article226 of the Constitution, ~ accordingly, the order of thelearned Single Judge cannot be construed as laying downan inflexible rule of non-entertaining of Writ Petition.when alternative remedy is available by relying on the|conclusion of that case. The appeal against the order of learned Single Judge[-]came to be rejected by theDivision Bench in)L. Sohanraj (supra),which merelyaffirmed the order of learned Single Judge without|adding anything further than what was laid down by the.learned Single Judge. L. Sohanraj & Ors. v. Deputy Commissioner of Income Tax and Another|(supra) 16. IniH.V. Shantaram (supra)the Court had/framed a question -“(i1) Whether this is a fit case for thisCourt to examine the correctness of the impugned order|in exercise of the power conferred on it under Articles|226 and 227 of the Constitution of India, even if the rightof appeal Is available? L. Sohanraj & Ors. v. Deputy Commissioner of Income Tax and Another|(supra) 16. IniH.V. Shantaram (supra)the Court had/framed a question -“(i1) Whether this is a fit case for thisCourt to examine the correctness of the impugned order|in exercise of the power conferred on it under Articles|226 and 227 of the Constitution of India, even if the rightof appeal Is available? While answering the said question, the observationsmade by the learned Single Judge are as under:-. "... Now the next question ts, if the petitionehas a right of appeal provided against the.impugned order before this Court, whether this Court in the light of the contentions advanced|by the learned Counsel appearing for the.petitioner that the impugned order is one.witnout Jurisdiction, snould proceed to examine the correctness of the impugned order and if it|is held that the impugned order is one made.without jurisdiction, whether this Court shouldinterfere against the impugned order? It is no.doubt true that when an order [Is meade Idisregard of principles of natural Justice or theorder made is one without Jurisdiction, tnis| Court could interfere against the said orders in)exercise of its powers under Articles 226 and2?/ of the Constitution of India, even if a rightof appeal is provided against sucn orders. But.the guestion is, when a right of appeal is.provided before Division Bencn of this Court ona substantial question of law where the scopeof interference is wider in appeal than the oneby this Court in exercise of its writ Jurisdiction,whether it is appropriate for this Court to.proceed to examine tne correctness of such)orders? As noticed by me earlier, in my view, when alternative remedy of right of appealprovided is to this Court and that too before a.Division Bench of this Court, it will be totally|inappropriate for this Court to exercise its.extraordinary Jurisdiction under Articles 226and 227/ of tne Constitution of India. Tnepower of this Court under Articles 226 and 227of the Constitution of India is exercised to setrignt the injustice done to a party and when.generally no remeay is provided to the partyunder a statute. Tne scope of examination by.this Court witn regard to the grievance made.by tne parties against the order passed by thesubordinate authorities, the Tribunals and Courts in exercise of the power under Articles276 and 277 of the Constitution of India Is}much narrower and circumscribed by in-builtlimitations imposed on it than tne right of.appeal conferred in a Statute. Thnerefore,question number 2 Is also requiread to beanswered against the petitioner. However, thesubmission of Sri Acharya that the respondent|also would not raise any objection witn regarato the maintainability of the appeal under 260A of the Act is placed on record.” Finally, the Court nas conciuded by rejecting thepetition filed under Article 226 and 22/7 of theConstitution of India while reserving liberty to challengethe impugned order by way of an appeal under Section |260A of the I.T. Act. The conclusion also cannot be relied upon as layingdown the rule of non-maintainability of Writ Petitionwhere an alternative remedy of appeal is provided undera statute. Tne observations reproduced above would clearly indicate that the entertaining of Writ Petition is amatter of discretion and appropriateness. 1/.Accordingly, the judgments of this Courtrelied upon and referred to above would reiterate that|entertaining of a Writ Petition in the presence of astatutoryalternativeremedyISamatter OF appropriateness indicating existence of discretion in theCourt while recognizing the exceptions for entertainingsuch Writ Petitions even where an alternative remedyexists. The conclusions in the above judgments do not|lay down any principle of law and are mere decisions inthe facts of the case and cannot be readde horstheother observations made in the said order and referencesto the judgments of Apex Court which would affirm theconclusion arrived at as hereinabove. 18.It is to be noticed that the subsequentjudgment of the Apex Court in.Magadh Sugar and 1/.Accordingly, the judgments of this Courtrelied upon and referred to above would reiterate that|entertaining of a Writ Petition in the presence of astatutoryalternativeremedyISamatter OF appropriateness indicating existence of discretion in theCourt while recognizing the exceptions for entertainingsuch Writ Petitions even where an alternative remedyexists. The conclusions in the above judgments do not|lay down any principle of law and are mere decisions inthe facts of the case and cannot be readde horstheother observations made in the said order and referencesto the judgments of Apex Court which would affirm theconclusion arrived at as hereinabove. 18.It is to be noticed that the subsequentjudgment of the Apex Court in.Magadh Sugar and Energy LtdVVState of Bihar and Others['!],Bench of.three Judges), wherein the Apex Court was dealing with|the appeal challenging the order of the High Courtdeclining to entertain a Writ Petition on the ground thatthe dispute was suitable for adjudication under astatutory remedy was disposed off by remitting thematter back to the High Court to entertain the Writ|Petition. The relevant observations made are as follows: | “29. Wnile a Hign Court would normally not.exercise its writ Jurisdiction under Article 226 of tneConstitution if an effective and efficacious a/ternateremeay is availabie, the existence of an alternate|remedy does not by itself bar the High Court from)exercising its Jurisdiction in certain contingencies.This principle has been crystallized by this Court.in WhirlpoolCorporation v. RegistrarOf|Trademarks,Mumba!and HarbanslalSanni v.Indian Oj! Corporation Ltd. Recently, in Radna|Krishan [Industries v. State of Himachal Pradesh atwo judge Bench of this Court of which one of us—was a part of (Justice DY Chandrachud) hassummarized tne principles governing the exercise| 102021 SCC Online SC 801 ~ of writ jurisdiction by the High Court in thepresence of an alternate remedy. This Court hasobserved: "28. The principles of law which emerge are.that: (i) The power under Article 226 of the.Constitution to Issue writs can pe exercised not|only for the enforcement of fundamental rights, but|for any other purpose as well; (il) Tne Hign Court nas the aiscretion not to.entertain a writ petition. One of tne _ restrictionplaced on the power of the High Court is where an)effective alternate remedy is available to the.aggrieved person; (iii) Exceptions to the rule of alternate remedy|arise where (a) the writ petition has been filed forthe enforcement of a fundamental right protectedby Part III of the Constitution; (b) there has been aviolation of tne principles of natural Justice; (Cc)the order or proceedings are wholly witnout|jurisdiction; or (d) the vires of a legislation ischallenged; (iv) An alternate remedy by itself does not.divest tne Hign Court of its powers under Article|226 of the Constitution in an appropriate case|tnougn ordinarily, a writ petition snould not be| entertained when an efficacious alternate remedy isprovided by law; (Vv) Wnen a rignt is created by a statute, wnicnitself prescribes the remedy or _ procedure foenforcing tne right or lability, resort must be nad|to tnat particular statutory remeay before invokingthe discretionary remedy under Article 226 of the.Constitution. This rule of exhaustion of statutoryremedies is a rule of policy, convenience anddiscretion; and (vi) In cases where there are aisputedguestions of fact, the High Court may decide fo|decline jurisdiction in a writ petition. However, ifthe High Court is objectively of the view that thenature of the controversy requires the exercise ofits writ Jurisdiction, such a view would not readily|be interfered with. (emphasis supplied)” 2/7. The above principle was reiterated by atnree-jJuage Bencn of tnis_ Court’ in ExecutiEngineer v. Seetaram Rice Mill. In that case, a)show cause notice/provisional assessment order|was issued to the assessee on the ground of an)unauthorized use of electricity under Section126(1) of the Electricity Act 2003 and a qemanad for (vi) In cases where there are aisputedguestions of fact, the High Court may decide fo|decline jurisdiction in a writ petition. However, ifthe High Court is objectively of the view that thenature of the controversy requires the exercise ofits writ Jurisdiction, such a view would not readily|be interfered with. (emphasis supplied)” 2/7. The above principle was reiterated by atnree-jJuage Bencn of tnis_ Court’ in ExecutiEngineer v. Seetaram Rice Mill. In that case, a)show cause notice/provisional assessment order|was issued to the assessee on the ground of an)unauthorized use of electricity under Section126(1) of the Electricity Act 2003 and a qemanad for payment of electricity charges was raised. Theassessee contended that Section 176 wes not|applicable to it and challenged tne Jurisdiction ofthe taxing authorities to issue such a notice, beforethe High Court in its writ jurisdiction. Tne High|Court entertained the writ petition. When tnejudgment of the High Court was appealed before|this Court, it neld that the Hign Court did not)commit any error in exercising its jurisdiction in|respect of the cnailenge raised on the jurisdiction ofthe revenue authorities. This Court meade thefollowing observations: "81. Should the courts determine on merits of|the case or snouid they preferably answer tne|preliminary issue or Jurisdictional issue arising in|the facts of the case and remit the metter forconsiderationOP)meritsbythecompetent autnority? Again, it is somewhat difficult to state|with absolute clarity any principle governing sucn—exercise of jurisdiction. It always will depend uponthe facts of a given case.We are of theconsideredview|thatinterestof|administration of justice|Shalijl be pettsubserved if the cases of the present kind areneard by tne courts only where tney invoive| primaryquestions.ofjurisdictionOF|thematterswhicngotothevery|root|ofjurisdiction and where the authorities nave|acted beyond the provisions of the Act. &2. It is argueda ana to some extent correctlythat the High Court should not decline to exercise|its Jurisdiction merely for the reason tnat there is a)statutory aiternative remedy available even when|the case falls in the above stated class of cases. I[tis a settied principie that the courts/tribunal will not|exercise jurisdiction in futility. Tne law will not itselfattempt to do an act wnicn would be vain, lex nil)frustra facit, nor to enforce one whicn wouid be|frivolous-lex neminem cogit ad vana seu inutilia-tnelaw will not force anyone to do a thing vain and.fruitless.Tn|otnerwords,ifexerciseofjurisdiction by the tribunal ex facie appears to.be an exercise ofJurisdiction tn futility for any|oftheStatedreasoris,then|It|wil]be|permissible for the High Court to interfere in|exercise of its Jurisdiction. This issue [s nolonger res integra and nas been settied by a catenaof judgments of this Court, which we find entirely|unnecessary to refer to in detail... (emphasis supplied)“ 19.Finally, the judgment of Apex Court in.M/sGodrej Sara Lee Ltd.VVThe Excise and Taxation.officer , apart from reiterating the exceptions forentertainingWritPetitionsdespite|availabilityOF alterative remedy, has observed as follows:- “4 |In a long line of decisions, this Court hasmade it clear that availability of an alternativeremedy does not operate as an absolute bar tothe “maintainability” of a writ petition and tnatthe rule, whicn requires a party to pursue tnealternative remedy provided by a statute, is arule of policy, convenience and aiscretion ratnerthan a rule of law. Though elementary, it needstoberestated|that-entertainability”and“Maintainability” of a writ petition are distinctconcepts. Tne fine but real distinction betweenthe two ought not to be lost sight of. Theobjection as to maintainability” goes to tne rootof the matter and if such objection were found to—be of substance, the courts would be renderedincapableOf|eCVECreceivingtheIISforadjudication. On tne otner nand, the question of 11Civil Appeal No.5393/2010 dated 01.02.2023| 11Civil Appeal No.5393/2010 dated 01.02.2023| "entertainability” is entirely within the realm ofdiscretion of the high courts, writ remedy being.discretionary. A writ petition despite beingmaintainable may not be entertained by a higncourt for very many reasons or relief could evenbe refused to tne petitioner, despite setting up asound legal point, if grant of the claimed reliefwould not further public interest...” "8, ...1n the latter decision, this Court found thissue raised by the appellant to be_ pristinelylegal requiring determination by the nigh courtwitnout putting the appellant through the mill ofStatutory appeals in tne nierarchy. Wnat followsfrom the said decisions is that where thecontroversy is a purely legal one and it does notinvolve disputed questions of fact but onlyquestions of law, then it should be decided bythe nign court insteadq of dismissing the writpetition on tne ground of an alternative remedybeing available. 20. A perusal of the above observations would. indicate the following:- (a) Rule of exhaustion of statutory remedy is a ruleof policy, convenience and discretion[17]of policy, convenience and discretion[17] (b) Maintainability relates to an objection which ifupheld would operate as a Dar for taking up the.writ petition and result in rendering incapableadjudication of theIIs while the question ofentertainability is entirely within the realm of.discretion of the High Court Writ remedy beingdiscretionary[13]upheld would operate as a Dar for taking up the.writ petition and result in rendering incapableadjudication of theIIs while the question ofentertainability is entirely within the realm of.discretion of the High Court Writ remedy beingdiscretionary[13] (c) “In other words, if exercise of jurisdiction by theTribunal ex-facie appears to be an exercise ofjurisdiction in futility for any of the statedreasons, then it will be permissible for the HighCourtTO.interfereIn|exerciseofItsjurisdiction[14]isTribunal ex-facie appears to be an exercise ofjurisdiction in futility for any of the statedreasons, then it will be permissible for the HighCourtTO.interfereIn|exerciseofItsjurisdiction[14]is 12Radha Krishan Industries v. State of Himachal Pradesh - (2021) SCC OnLine SC)334 ~- "D(v) When a right is created by a statute, which itselfprescribes the remedy|or procedure for enforcing the right or liability, resort must be had to that particular|statutory remedy before invoking the discretionary remedy under Article 226 of the|Constitution. This rule of exhaustion of statutory remedies is a rule of policy,convenience and discretion; " 13M/s Godrej Sara Lee (supra) - para - 4 14Executive Engineer v. Seetaram Rice Mill - para - 82 D1.Accordingly, where the petitioner contendsthat the legal question raised is covered by the judgmentof Apex Court inMahindra and Mahindra (suprawhich lays down a pure principle in law and does notrequire detailed investigation into the facts, suchassertion if accepted, would lead to the allowing ofMiscellaneous Application for rectification in its entiretyand taking note of the principle noticed at point (Cc)above, no purpose would be served in relegating theparties to avail the statutory remedy. That apart, asnoticed in the principle at points (a) and (b) above, theentertaining of Writ Petition involves discretion of theCourt and there being no inflexible rule acting as a bar toentertaining of Writ Petition even where alternativeremedy is available. 2).Accordingly,thecontentionregardingmaintainability of the Writ Petition is rejected whileClarifyingthat|thejudgments|ofthis|Court| in | L. Sohanraj (supra)andH.V. Shantaram (supra)do.not create a bar on maintainability of Writ Petition ascontended and the later judgments of the Apex Court in|MagadhSugarandEnergyLtd(supra)andM/s.Godrej] Sara Lee (suprafurther explain and_reiterate that existence of an alternative remedy doesnot raise a bar on maintainability and only call upon theCourt to decide on. entertainability which involvesexercise of judicial discretion. (B) Whetherthelawlaiddown|In| 2).Accordingly,thecontentionregardingmaintainability of the Writ Petition is rejected whileClarifyingthat|thejudgments|ofthis|Court| in | L. Sohanraj (supra)andH.V. Shantaram (supra)do.not create a bar on maintainability of Writ Petition ascontended and the later judgments of the Apex Court in|MagadhSugarandEnergyLtd(supra)andM/s.Godrej] Sara Lee (suprafurther explain and_reiterate that existence of an alternative remedy doesnot raise a bar on maintainability and only call upon theCourt to decide on. entertainability which involvesexercise of judicial discretion. (B) Whetherthelawlaiddown|In| Mahindra and Mahindra (supraif.taken note of, would result in benefit in.the form of waiver of loan being:construed as monetary benefit and notcovered by Section 28(iv) of the I.T..Act? 23. At the outset, it must be noted that theRevenue is not placing reliance on Section 41(1) of the| I.7. Act. — 24. Accordingly, what needs to be determined isas to whether the wavier of loan leading to a ‘benefit|would fall within the ambit of Income in terms of Section28(iv) of the I.T. Act and hence, chargeable to Income. Tax? The relevant extract of Section 28(iv) reads as.follows:- '28. Profits and gains of business orprofession-|Thefollowing|IncomeShal||be|chargeable to income tax unaer tne nead Profits|and gains of business or profession, .. (iv) the value of any benefit or perquisite,whether convertible into money or not, arising|from business or the exercise of a profession. ” 25. The admitted facts being that the petitionerCompany has received a ‘benefit’ by waiver of loans, the|interest on such waived loans though has been offered to tax, the waived principal amount of loan is not offered totax. The only contention of the Revenue is that the|purpose of loan which has been waived, i.e., whether|loan was a term loan or working capital loan would)determine, if it would be taxable under Section 28(iv) of|the I.T. Act. | 26. It is contended that, if the loan was taken forworking capital, trading purpose and was waived, the|benefit being in the nature of a revenue character would|fall within the definition of benefit’ under Section 28(iv)|of the I.T. Act and would be income which was taxable.However, if the loan was taken for a capital purpose andupon waiver of it, the benefit would not constitute|‘benefit’ for the purposes of Section 28(iv) of the I.T. Act| being capital in nature and hence would not constitute|income chargeable to tax. 2/7. Reliance is placed on the judgment of HighCourt of Mumbal inSolid Containers Ltd.,\VDeputyCommissioner of Income Tax and Another[15] Extending the aforesaid logic, reliance is also placedon the judgment of Apex Court in.Commissioner of|income Tax.V7T.V. Sundaram Iyengar & Sons Ltd.[16]to contend that there could be ‘changing character of.receipt by efflux of time. It is submitted tnat a receipt|which is capital in nature in earlier year can changeits |Character as revenue receipt with efflux in time which|needs to be kept in mind. 28. The assessee on the other hand has relied on the judgment in|Mahindra and Maninara (supra) 15(2009) 308 ITR 0417 - High Court of Bombay has held that any amount received asloan by the assessee for trading activity and retained in business upon waiver 1s|taxable under Section 28(1v) of the IT Act. 16(1996) 222 ITR 0344 where the Apex Court had declared that the benefit to be|taxable for the purpose of Section 28(iv) of the I.T. Act,should be a benefit/ perquisite other than in the shape oftmoney. The Apex Court held that the benefit Upon waiver|of loan was in the nature of cash receipt and accordingly,the benefit not being “other than in the shape of money’|would fall outside the ambit of Section 28(iv) of I.T. Act|and hence, would not constitute income that could be|taxable. | 29. It must be noted that the Apex Court in.Mahindra and Mahindra (supra)was dealing with thewaiver of loan and the relevant reasoning as regards.Section 28(iv) of the I.T. Act is found in para Nos.13 to|16, which are as follows:- where the Apex Court had declared that the benefit to be|taxable for the purpose of Section 28(iv) of the I.T. Act,should be a benefit/ perquisite other than in the shape oftmoney. The Apex Court held that the benefit Upon waiver|of loan was in the nature of cash receipt and accordingly,the benefit not being “other than in the shape of money’|would fall outside the ambit of Section 28(iv) of I.T. Act|and hence, would not constitute income that could be|taxable. | 29. It must be noted that the Apex Court in.Mahindra and Mahindra (supra)was dealing with thewaiver of loan and the relevant reasoning as regards.Section 28(iv) of the I.T. Act is found in para Nos.13 to|16, which are as follows:- "13. The term “loan” generally refers toborrowing something, especially a sum of cashthat is to be paid back along witn tne interestaecided mutually by the parties. In otner|terms, the debtor is under a liability to pay. back the principal amount along witn the.agreed rate of interest within a stipulated time. 14. It is a _ well-settled principle tnacreditor or nis successor may exercise their.‘Tight of waiver” unilaterally to absolve thedebtor from his liability to repay. After suchexercise, the debtor is deemed to be absolvedfrom the liability of repayment of loan subjectto the conditions of waiver. The waiver may bea partly waiver i.e. waiver of part of the.principal or interest repayable, or a completewaiver of both the loan as well as interest|amounts. Hence, waiver of loan by tne creditor|results in the debtor naving extra cash in nis)hand. It its receipt in the hands of theadebtor/assessee. The snort but cogent issue inthe instant case arises whether wejiver of loanby tne creditor is taxable as a perquisite underSection 28(iv) of the IT Act or taxable as a.remission of liability under Section 41(1) of the[T Act. 15. Tne first issue is tne applicability of:Section 28(iv) of the IT Act in the present case. Before moving further, we deem it apposite to.reproduce tne relevant provision hereinbelow: V28. Profits and gains of business orprofession.—The following income shall|be chargeable to income tax under thehead "Profits and gains of business orprofession’ — (iv)thevalueofallybenefitOF|perquisite,whetherconvertibleInto|money or not, arising from business orthe exercise of a profession; ” 16. On a plain reading of Section 28(iv) of theIT Act, prima facie, it appears that for the.applicability of the said provision, the incomewhich can be taxed sSheal/ arise from thbusiness or profession. Also, in order to invokethe provision of Section 28(iv) of the IT Act, the benefit which [s rece[ved has to be In someother form rather than in the shape of money. In the present case, it is a matter of record.that the amount of Rs 5/7,74,064 is navingreceived as casn receipt due to tne waiver of.loan. Therefore, the very first condition § oSection 28(iv) of the IT Act which says any.benefit or perquisite arising from the business|Shall be in the form of benefit or perquisiteother than in tne snape of money, is not. satisfied in the present case. Hence, in ourview, in no circumstances, it can be Said that|the amount of Rs.57,/74,064 can be taxedunder the provisions of Section 28(iv) of the ITAct.” 30. The clinching factor as per the Apex Court in MahindraandMahindra(supra)CO bring»thebenefit/perquisite within the term ‘income’ under Section28(iv) of the I.f. Act was that the ‘benefit/perquisite’|should be ‘other than in the shape of money’, while)holding that the benefit upon loan waiver was in the formof a cash receipt and did not satisfy the test to make it)taxable within the terms of section 28(iv). Clearly, the|purpose of loan was neither dealt with nor would be a/relevant determinative factor. The only test is that the|‘benefit’ or ‘perquisite’ should be other than ‘in the shapeof money’. 31. Thus, in the present case, the nature of loanwould be of no relevance and accordingly, the exercise of ascertaining the purpose of loan as contended by the|Revenue does not arise. 30. The clinching factor as per the Apex Court in MahindraandMahindra(supra)CO bring»thebenefit/perquisite within the term ‘income’ under Section28(iv) of the I.f. Act was that the ‘benefit/perquisite’|should be ‘other than in the shape of money’, while)holding that the benefit upon loan waiver was in the formof a cash receipt and did not satisfy the test to make it)taxable within the terms of section 28(iv). Clearly, the|purpose of loan was neither dealt with nor would be a/relevant determinative factor. The only test is that the|‘benefit’ or ‘perquisite’ should be other than ‘in the shapeof money’. 31. Thus, in the present case, the nature of loanwould be of no relevance and accordingly, the exercise of ascertaining the purpose of loan as contended by the|Revenue does not arise. 32. The judgment of Apex Court inMahindraand Mahindra (supra)holds the field. The benefit of.waiver of loan in the present case is also not other than‘in the shape of money’. Accordingly, the ‘benefit’ wouldfall outside the ambit of Section 28(iv) of I.T. Act. 33. The recent amendment to Section 28 of I.T.Act vide Finance Bill 2023[1/], wherein the legislature has.included ‘benefit’ even in form of ‘cash’ arising from)business or profession as being chargeable to income|tax. Such amendment substantiates the interpretation of 11Finance Bill 2023- "II. In section 28 of the Income-tax Act, for clause (iv), the|following clause shall be substituted with effect from the Ist day of April, 2024,|namely:— “(iv) the value of any benefit or perquisite arising from business or the|exercise ofa profession, whether— (a) convertible into money or not; or (b) in cash|or in kind or partly in cash andpartly in kind; ”’following clause shall be substituted with effect from the Ist day of April, 2024,|namely:— “(iv) the value of any benefit or perquisite arising from business or the|exercise ofa profession, whether— (a) convertible into money or not; or (b) in cash|or in kind or partly in cash andpartly in kind; ”’ the Apex Court in.Mahindra and Mahindra (supra),wherein it was concluded that the ‘benefit’ not being|“other than in the shape of money” i.e., ‘benefit’ in formof cash would fall outside the ambit of Section 28(iv) of|the I.T. Act by proposing the present amendment. | (C) What order? 34. In light of the above reasoning, no purpose.would be served by referring to the judgments relied|upon by the Revenue. Even otherwise, as referred to in|para-6 of the written submissions filed by the petitioner|dated 04.08.2023, the judgments of High Courts[18]reliedupon by the Revenue have been dismissed by the Apex|Court inMahindra and Mahindra (supra). 35. Accordingly, the order dated 05.09.2022 atAnnexure--F) passed by the Income Tax Appellate) 18Logitronics (P) Ltd. v. Commissioner of Income Tax and Anr - (2011) 333 ITR 0386;|Commissioner of Income Tax v. Ramaniyam Homes P. Ltd - (2016) 95 CCH 0147 ChenHCCommissioner of Income Tax v. Ramaniyam Homes P. Ltd - (2016) 95 CCH 0147 ChenHC Tribunal "C" Bench, Bangalore in M.P. No.4/7/Bang/2022in ITA No.1317/BANG/2018 for the Assessment Year.2006-2007 Is set aside. The Tribunal is directed to|reconsider.M.P.No.47/Bang/2022Inlight.ofthediscussion made hereinabove without re-opening any|fresh question for consideration. Accordingly, the petition isdisposed off Sd/-JUDGE| NP/VGR