KHANNA RAYON INDUSTRIES PVT. LTD.,MUMBAI vs. DCIT 4(2)(2), MUMBAI

O R D E R PER BENCH 1. These appeals are filed by the assessee against different orders of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld.CIT(A)”] dated 24.01.2023 and 25.01.2023 for the A.Y. 2015-16 and 2016-17 respectively.

& 669/MUM/2023 (A.Ys: 2015-16 & 2016-17) Khanna Rayon Industries Pvt. Ltd., 2. Assessee has raised following grounds in its appeal: -

“Ground raised in A.Y. 2015-16 “1. That the Learned CIT (Appeals) has erred both in law and facts of the case.

2. That the Learned CIT(A) has erred in confirming the addition of Rs. 1:05 Cr. (put of Rs 1.66 Cr) made by the A.O. by wrongly holding that the loan taken by the firm was primarily for the benefit of the assessee and as such remission of Rs. 1.66 Cr. in the same was liable to be taxed in the hands of the assessee.

3. That the reasons advanced by the learned A.O. for holding the remission of debt taxable in the hands of the assessee company that of not charging guarantee commission being totally unsound and unreasonable, the addition made on that account is unsustainable unjustified and requires to be deleted.

4. (a) That the appellant company being only a guarantor to the Bank for the said loan the question of taxing the remission if any in the loan by the Bank if at all pertains to the original borrower viz the firm of M/s Khanna Sales Corporation and not at all the appellant company. (b) That without prejudice to the above fact the provision of Sec 28 (iv) are attracted only when the remission in the business loan or debt etc is in the form of a benefit or perquisite other than cash. The provisions of sec. 28(iv) of the Act having been misunderstood and misconstrued by the A.O. the addition of Rs. 1.66.Cr. made there under by the AO. was patently wrong and bad in law and so was the confirmation of the of Rs 1.05 Cr (out of the said 1.66 Cr) by the Learned CIT (A). The order for addition of Rs. 1.05 Cr thus made by the learned CIT(A) requires to be quashed to that extent and the addition deleted.

5. That the appellant craves leave to add alter, amend or withdraw any of the grounds of appeal at or before the time of hearing. Grounds raised for the A.Y. 2016-17

1. That the learned CIT(A) has erred in law and facts of the case.

2. That the Learned CIT(A) has erred in confirming the disallowance of genuine business expenses of Rs. 5730629 made by the A.O.

Page No. 2 & 669/MUM/2023 (A.Ys: 2015-16 & 2016-17) Khanna Rayon Industries Pvt. Ltd., That the learned CIT (A) has erred in holding that expenditure incurred by the appellant is for non business purpose and has thus erred in confirming the wrongful disallowance of Rs 5730629 made by the A.O. That the said expenditure was incurred on account of the legal obligation that of a guarantor to the Bank and also to secure its valuable business asset by release of the Bank lien. On both these accounts the expenditure incurred was purely for the purpose of business. The confirmation of the rejection of the same by the learned CIT(A) was improper unjustified and unsustainable 3. That the learned CIT(A) has grossly erred in omitting to deal with and consider the determined carry forward losses of Rs. 241902 and Rs. 2889391 for the assessment years 2008-09 and 2010-11 respectively wrongly taken at NIL by the A.O 4. That the assessee craves leave to add alter or withdraw any of the grounds of appeal at or before the time of hearing.”

3. At the time of hearing, Ld. Counsel for the assessee submitted that despite the addition made, the assessed income is still NIL due to unabsorbed losses and depreciation. Further, Ld. AR submitted that the same have not been fully absorbed and the addition made has no tax effect. As such, assessee do not want to press these appeals. Assessee vide letters dated 27.06.2023 requested for withdrawal of appeals.

ITA Nos. 668 & 669/MUM/2023 (A.Ys: 2015-16 & 2016-17) Khanna Rayon Industries Pvt. Ltd., A.Y.2015-16 and 2016-17 on similar reasons requested for withdrawal of appeals. Contents of the letter dated 27.06.2023 filed by the assessee for the A.Y. 2015-16 requesting for withdrawal of appeal, are reproduced below: - “Ref: Khanna Rayon Industries Pvt. Ltd. v. DCIT - AY 2015-16 Withdrawal of Appeal The above appeal has been fixed for hearing today before the H Bench. I have been authorised to appear for the same. The letter of authority in my favour is enclosed herewith. Under instructions, it is submitted that despite the addition made, the assessed income is still NIL due to unabsorbed losses and depreciation. Even now the same have not been fully absorbed. In other words, the addition made has no tax effect. Keeping this position in mind, the assessee does not wish to pursue this appeal. The same may therefore be kindly permitted to be withdrawn.”

In view of the above request for withdrawal of appeals, the appeals under consideration are permitted to be withdrawn.

Order pronounced in the open court on 21st July, 2023.