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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI BASKARAN BR, AM & SHRI ABY T. VARKEY, JM
Assessee by: Shri .Vimal Punamiya Revenue by: Shri. V.K. Chaturvedi, Sr AR सुनवाईकीतारीख / Date of Hearing: 04/10/2022 घोषणाकीतारीख /Date of Pronouncement: 21/11/2022 आदेश / O R D E R PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee against order of the Ld.CIT(A)/NFAC dated 14.03.2022 for A.Y. 2018-19.
The grounds of appeal raised by the assessee Trust are as under:- 2.
1. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in confirming the Total Income of the Appellant at Rs. 1,17,04,178/-.
AY- 2018-19 Tikona Trust, Mumbai 2. On the facts and in the circumstances of the case and in law the learned CIT (A) erred in not allowing the set off of brought forward losses of the previous eight years claimed by the Appellant.
3. On the facts and in the circumstances of the case the Id. CIT (A), National Faceless Assessment Centre, erred in confirming the disallowance of loss of Rs. 1,17,04,178/- claimed by the Appellant.
4. On the facts and in the circumstances of the case the Id CIT (A), National Faceless Assessment Centre, erred in appreciating the fact that as per the Intimation for the A.Y. 2017-18 the loss of Rs.61,11,994/- was already determined by the CPC as allowable loss. Hence, the Appellant was entitled to set off of the same. 4.1 On the facts and in the circumstances of the case the Learned CIT(A), National Faceless Assessment Centre, erred in appreciating the fact that it was not open for CPC to disallow the set off of loss already determined in the intimation for A.Y. 2017-18 without following the due procedure as per law. It was beyond the powers of CPC to ignore the brought forward loss of Rs. 61,11,994/- already computed by the CPC as per the intimation for the A.Y. 2017-18 and not to allow the set off thereof.
5. On the facts and in the circumstances of the case the Ld.CIT(A),National Faceless Assessment Centre, erred in appreciating the fact that the Returns of Income filed by the Appellant were within the time limit as per Section 139(1), since the accounts of the Appellant were required to be audited as per the amended Trust Deed.
6. Without prejudice, On the facts and in the circumstances of the case the Id. CIT(A), National Faceless Assessment Centre. erred in appreciating the fact that write back of loan is not cessation of liability and not chargeable to tax u/s 41, Hence, the Appellant is not liable to pay any tax on the same. 2 AY- 2018-19 Tikona Trust, Mumbai 7. On the facts and in the circumstances of the case and in law the learned Assessing Officer - CPC erred in charging interest U/s. 234B and 234C of the Income Tax Act, 1961.
8. The Appellant craves leave to add, amend, delete, alter, modify or substitute any or all the above ground(s) of appeals.
The main grievance of the assessee against the action of the Ld.CIT(A) in confirming the action of the AO/CPC not allowing set-off of brought forward business losses against current year business income.
In the alternative, the assessee has raised a contention in ground no.6 that the write back of loan is not a cessation of trading liability and hence not chargeable to tax u/s 41(1)of the Act.Accordingly it is contended that the amount of loan written back and credited to the Profit and Loss account should be excluded from the total income.
Brief facts of the appeal is that the assessee trust is “private trust” and during the year under consideration (AY 2018-19) it had filed return of income on 31st August 2018 showing income from business and profession at Rs.1,17,04,178/-. Since the assessee had brought forward losses of the earlier years, it claimed set off the losses of earlier years against current year’s income and accordingly, the gross total income of the assessee was claimed to be Rs. Nil.
However, the AO/CPC noticed that the returns of income of the earlier years have been filed beyond the time prescribed u/s 139(1) of the Act. It is pertinent to AY- 2018-19 Tikona Trust, Mumbai note that, as per the provisions of sec.139(3), if any person has sustained loss in any previous year and claims that the loss or any part thereof should be carried forward under various provisions of the Act, then he may furnish the return of loss within the time allowed u/s 139(1)of the Act, meaning thereby, if the returns of income of earlier years were not filed within the due date prescribed u/s 139(1) of the Act, the loss of earlier years cannot be carried forward and set off against subsequent year’s income. The CPC took the due date for filing return of income by the assessee as 31st July as per clause (c)of Explanation 2 to sec. 139(1) of the Act. It is also pertinent to note that the due date of 31st July, was extended by the Central Government in some of the years by notification due to certain unavoidable circumstances.However, the assessee had not filed its return of income within the due date prescribed under clause (c) of Explanation 2 to sec. 139(1) or even within extended period in any of the earlier years. Further, the loss, even if it is eligible to be carried forward, could be carried forward only for eight succeeding assessment years. Hence the CPC did not allow set off of brought forward losses. Accordingly, it determined the total income of the assessee at Rs. 1,17,04,178/-. The due date considered by CPC and the date of filing of return of income of earlier eight years have been tabulated as under by Ld CIT(A):- S. No. Asst. Year Due date of filing ROI Actual date of filing ROI 1 2010-11 04-08-2010 08-03-2011 2 2011-12 01-08-2011 19-03-2012 2012-13 01-08-2012 31-08-2012 3 AY- 2018-19 Tikona Trust, Mumbai 4 2013-14 05-08-2013 27-09-2013 2014-15 31.07.2014 27-08-2014 5 6 2015-16 07-09-2015 30-09-2015 2016-17 05-08-2016 29-09-2016 7 8 2017-18 05-08-2017 12.08.2017
Before Ld CIT(A), the assessee contended that it is a private trust and as per the clauses of trust deed, its accounts are required to be audited. Since the accounts are required to be audited, the due date should be taken as 30th September or extended period, as per sub-clause (ii) of clause (a) of Explanation 2 to sec.139(1)of the Act. Accordingly, it was contended that the CPC/AO has erroneously adopted 31st July as the due date of filling of return of income as envisaged under clause (c) of Explanation 2 to section 139(1) of the Act. Therefore the disallowance of the brought forwarded business loss was wrong.
The above said contentions of the was not accepted by the Ld.CIT(A). Accordingly, the Ld.CIT(A) confirmed the action of AO/CPC by holding as under:
I have carefully considered the facts of the case, the Intimation u/s 143(1) and the written submissions of the assessee. In the return of income, the assessee claimed set-off of brought forward business losses of A.Ys 2010-11 to 2017-18 against the current year business income of Rs.1,17,04,178/-. The assessee claimed the quantum of brought forward losses at Rs.1,51,40,930/- and set-off the said losses against current year business income to the extent 5 AY- 2018-19 Tikona Trust, Mumbai of Rs.1,17,04,178/-. The balance losses amounting to Rs.34,36,752/- were claimed to be carried forward to the subsequent assessment year. The assessment year wise break-up of the business losses shown to have been brought forward by the assessee for set-off is as under:
Assessment Year SI.No Brought forward Business Loss claimed set-off (Rs) 1 10,84,796 2010-11 2 2011-12 19,38,097 3 20,35,305 2012-13 4 20,19,694 2013-14 5 20,10,661 2014-15 6 20,10:324 2015-16 7 20,16,131 2016-17 8 20,25,922 2017-18 Total 1,51,40,930
10. However, the ADIT (CPC) did not grant the set-off of the brought forward business losses against the current year business income. The set-off was disallowed on the ground that the business losses of the relevant assessment years from A.Y 2010-11 to 2017-18 are not eligible for carry forward and set- off since the returns of income for the said assessment years were not filed within the due date as specified under u/s 139(1). The due date of filing the return of income u/s 139(1) and the date of filing the return of income were tabulated as under in the Intimation u/s 143(1), in support of the said disallowance of set-off:
AY- 2018-19 Tikona Trust, Mumbai Assessment Year Sr.No Due date of filing the Date of filing the return return 1 2010-11 04.08.2010 08.03.2011 2 19.03.2012 2011-12 01.08.2011 3 2012-13 01.08.2012 31.08.2012 4 2013-14 27.09.2013 05.08.2013 5 2014-15 27.08.2014 31.07.2014 6 2015-16 07.09.2015 30.09.2015 7 29.09.2016 2016-17 05.08.2016 8 2017-18 05.08.2017 12.08.2017
During the appellate proceedings, the assessee contended that the ADIT (CPC) has wrongly considered the due date of filing the return of income applicable to non-audit cases, for coming to the conclusion that the returns of income were not filed within the due date for the relevant assessment years. The assessee contended that the case of the assessee is required to be considered as an audit case and there is no delay in filing the return of income for any of the assessment years if the due date of filing the return as applicable to audit cases is taken into consideration. The assessee contended that it is a private trust which is governed by the provisions of the Indian Trust Act, 1882 and that its accounts have been audited for all the relevant years under the provisions of the said Act.
AY- 2018-19 Tikona Trust, Mumbai 12. On careful examination, the contention of the assessee that the due date of filing the return specified for audit cases in clause (a) of Explanation 2 to section 139(1) is applicable to it is found to be untenable. The due date for audit cases is specified in the said clause as 30th September for the relevant assessment years as against the due date specified as 31st July for non-audit cases in clause (c) of the said Explanation. In the case of a person other than a company, clause (a) of the said Explanation is applicable if the accounts of the person are required to be audited under the Income Tax Act or under any other law for the time being in force. In this regard, on perusal of the Income & Expenditure Account of the assessee for the previous years relevant to A.Ys 2010-11 to 2017-18, it is seen that the turnover/total sales/gross receipts of the assessee is NIL for each of the said years and the case of the assessee does not fall within the scope of tax audit under the provisions of section 44AB of the Income Tax Act.
Further, on perusal of the provisions of Indian Trust Act, 1882, it is noticed that there is no requirement of mandatory audit of the books of account of trusts governed by the said Act as per the said provisions. The assessee was therefore requested to cite the specific provisions of the Indian Trust Act which impose the legal obligation of getting the books of account audited. In the response furnished on 28.01.2022, the assessee did not specify the provisions of Indian Trust Act, 1882, which provide for mandatory audit of the books of account of trusts. Instead, the assessee pointed out that its trust deed provided for auditing of accounts. Though the assessee stated that the trust deed has been enclosed to the reply, it is noticed that the same was not enclosed. Regardless of whether the assessee supplied the copy of trust deed or not, it is evident that there is no requirement in the relevant law for auditing the books of account. Thus, it is seen that there is no legal 8 AY- 2018-19 Tikona Trust, Mumbai requirement to get the books of account audited either under the Income Tax Act or the Indian Trust Act in the case of the assessee for any of the relevant assessment years. In the circumstances, it is held that the case of the assessee does not fall under the ambit of clause (a) of Explanation 2 to section 139(1) and that the due date of filing the return of income specified therein for audit cases is not applicable to the assessee.
14. In view of the above, the due date of filing the return applicable to non- audit cases as specified in clause (c) of the Explanation 2 to section 139{1) is applicable to the assessee, as considered by the ADIT (CPC) in the Intimation u/s 143(1). Since the assessee failed to file the returns of income for the relevant assessment years 2010-11 to 2017-18 within the due date applicable to non-audit cases, the assessee is not eligible for carry forward and set-off of the business loss of the said assessment years as per the provisions of section 139(3) r.w.s 80 of the IT Act The claim of the assessee for set-off of such losses against the business income of the instant assessment year to the extent of available business income is therefore not in accordance with law.
15. The assessee contended that the claim of set-off of brought forward business losses cannot be disallowed in the instant assessment year, when the said business losses were allowed to be carried forward while processing the return of income for the earlier A.Y 2017-18. However, this contention of the assessee is also considered to be untenable. It is a settled position of law that it is the AO dealing with the assessment of the year in which the set-off is claimed for the brought forward losses, who is empowered to decide whether the carry forward and set-off claimed is as per the provisions of the law and take a decision with regard to the same. The decision of the AO to allow carry forward of the loss in the assessment year in which the loss was incurred does 9 AY- 2018-19 Tikona Trust, Mumbai not have any binding force on the AO who is taking the decision for the assessment year in which the set-off for the said loss is claimed. This proposition of law has been laid down by the Hon'ble Supreme Court in the case of CIT Vs. Manmohan Das (Deceased) [1966] 59 ITR 699 (SC). In view of the law laid down by the Hon'ble Apex court, the contention of the assessee that the set-off of brought forward business losses cannot be disallowed in the instant assessment year when they were allowed carry forward in the Intimation u/s 143(1) for the earlier A.Y 20171-18 is held to be unsustainable in law.
16. Further, it is noticed that there is discrepancy in the quantum of brought forward business losses claimed by the assessee for A.Ys 2010-11, 2011-12, 2012-13 and 2013-14 in the return of income for the instant assessment year on comparing the same with the corresponding business loss admitted in the returns of income filed for the said assessment years, as shown in the table below:
Assessment Year Amount of business loss Amount of business loss as per the return filed for respective Asst Year (Rs.) brought forward for set-off in the return for A.Y 2018-19 (Rs.)
10,84,796 0 0 2010-11 19,38,097 29,158 2011-12 20,35,305 27,923 2012-13 20,19,694 17,797 2013-14 Total 70,77,892 74,878 AY- 2018-19 Tikona Trust, Mumbai 17. As can be seen from the above, the brought forward business losses were overstated by the assessee in the return of income for the instant assessment year by an amount of Rs.70,03,014/- (Rs.70,77,892/- less Rs.74,878/-). On bringing the said discrepancy to the notice of the assessee with a request to explain the reasons for the same, the assessee merely stated that the business loss declared in the returns of income filed for A.Y 2010-11 to 2013-14 was erroneous and requested that the correct amount of such losses now shown in the return of income for AY 2018-19 may be adopted. The said request of the assessee cannot be accepted under the provisions of law. The loss declared in the returns of income cannot be modified unless the same is revised by the assessee under the provisions of the Act by ftting a revised return, in the absence of such furnishing of revised returns as per the provisions of Iaw7 the loss declared in the return cannot be subjected to any modification. This observation is made without prejudice to the finding rendered in the earlier paragraphs that the assessee is not legally entitled to the carry forward and set-off of the business losses pertaining to the A.Ys 2010-11 to 2017-18 in view of the delay in filing the returns of income for the concerned assessment years.
In view of the foregoing discussion, the disallowance of set-off of the brought forward business losses of A.Ys 2010-11 to 2017-18 against the current year business income to the extent of Rs.1,17,04,178/- made in the Intimation u/s 143(1) is hereby sustained. These grounds of appeal
are accordingly dismissed.
8. Aggrieved by the action of the Ld.CIT(A), the assessee is before us.
AY- 2018-19 Tikona Trust, Mumbai 9. We have heard both the parties and perused the records. The facts discussed (supra) are not repeated for the sake of brevity. In continuation of our discussion (supra) we note that the main contention of assessee is that the due date for it should be taken as 30th September, since its accounts are required to be audited as per trust deed. In this regard, the assessee has taken support of sub-clause (ii) of clause (a) of Explanation 2 to sec. 139(1). This section, as existing in AY 2018-19 read as under:-
Explanation 2 – In this sub-section, “due date” means,-- “(a) where the assessee other than an assessee referred to in clause (aa) is (i)……………. or (ii) a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force ; or (iii)……. the 30th September of the assessment year” A careful perusal of the above said provision would show that the requirement of getting accounts audited should be “under the Income tax Act or under any other law”. Hence it is required to be examined as to whether the accounts of the assessee are required to be audited under the Income tax Act or under any other law. We notice that the ld CIT(A) has given clear finding that the accounts of the assessee are not required to be audited under the Income tax Act or under any other AY- 2018-19 Tikona Trust, Mumbai law. At the cost of repetition, we extract below the relevant portion of the order passed by Ld CIT(A) on this question:-
“12………….In this regard, on perusal of the Income & Expenditure Account of the assessee for the previous years relevant to A.Ys 2010-11 to 2017-18, it is seen that the turnover/total sales/gross receipts of the assessee is NIL for each of the said years and the case of the assessee does not fall within the scope of tax audit under the provisions of section 44AB of the Income Tax Act.
13. Further, on perusal of the provisions of Indian Trust Act, 1882, it is noticed that there is no requirement of mandatory audit of the books of account of trusts governed by the said Act as per the said provisions. The assessee was therefore requested to cite the specific provisions of the Indian Trust Act which impose the legal obligation of getting the books of account audited. In the response furnished on 28.01.2022, the assessee did not specify the provisions of Indian Trust Act, 1882, which provide for mandatory audit of the books of account of trusts. Instead, the assessee pointed out that its trust deed provided for auditing of accounts. Though the assessee stated that the trust deed has been enclosed to the reply, it is noticed that the same was not enclosed. Regardless of whether the assessee supplied the copy of trust deed or not, it is evident that there is no requirement in the relevant law for auditing the books of account. Thus, it is seen that there is no legal requirement to get the books of account audited either under the Income Tax Act or the Indian Trust Act in the case of the assessee for any of the relevant assessment years. In the circumstances, it is held that the case of the assessee does not fall under the ambit of clause (a) of Explanation 2 to section AY- 2018-19 Tikona Trust, Mumbai 139(1) and that the due date of filing the return of income specified therein for audit cases is not applicable to the assessee.” Before us also the assessee failed to bring to our notice any specific provision under any law which mandates that the assessee’s books of account need to be audited. Therefore, we agree with the view taken by Ld CIT(A) that the assessee has to file its ROI on or before 31st July as per the clause (c) of Explanation 2 of section 139(1) of the Act. We note that the assessee is not required to audit its books as per the Income Tax Act or under any other law and therefore clause (a)(ii) of section 139(1) of the Act is not attracted to the assessee’s case. Therefore, the action of the Ld.CIT(A) in confirming the action of CPC/AO cannot be faulted. So we confirm the action of the Ld.CIT(A) on this issue.
The assessee has raised an alternative contention in ground no.6. The Ld A.R invited our attention to the Profit and Loss account placed at page 7 of the paper book, particularly, the credit side of the P & L account. The ld A.R submitted that the assessee had taken loan in an earlier year and the said loan consisting of both principal amount and interest amount has been waived off. He submitted that the amount of principal portion of loan amounting to Rs.2,00,18,970/- has also been credited to the Profit and loss account and it was also offered to tax in the return of income. He submitted that there is no quarrel that the interest expenses waived by the lender is taxable u/s 41(1) of the Act, since the same had been claimed as expenditure in the earlier year. The principal portion has not been claimed as expenditure and hence the waived amount of principal is not taxable u/s 41(1) of AY- 2018-19 Tikona Trust, Mumbai the Act. He submitted that the assessee had initially offered the same as its income, as its total income turned out to be NIL after setting off of brought forward losses. Since, it has been held by the tax authorities that the assessee is not eligible to claim set off of brought forward losses, the assessee is raising this alternative contention that the principal portion of loan waived by the lender should be excluded while computing total income. The Ld A.R placed his reliance on the decision rendered by Hon’ble Supreme court in the case of CIT vs. Mahindra & Mahindra limited (Civil Appeal Nos. 6949 – 6950 of 2004) in this regard. He submitted that there is no estoppel against law and hence, any receipt, which is not taxable under the law, cannot be brought to tax merely on the reasoning that the assessee himself has offered the same for taxation.
11. The Ld D.R,, however, submitted that the assessee has not raised this ground before Ld CIT(A) and is raising this alternative contention for the first time before the Tribunal. Accordingly, he submitted that this alternative ground should not be admitted.
In the rejoinder, the Ld A.R submitted that the ground urged by the assessee is a legal ground and all facts relating thereto are available on record. Accordingly, he submitted that this ground may be admitted and adjudicated by the Tribunal, as held by Hon’ble Supreme Court in the case of NTPC Ltd (229 ITR 383)(SC).
AY- 2018-19 Tikona Trust, Mumbai 13. We have heard rival contentions on this issue. The essential question raised in the alternative contention is whether the principal portion of loan waived by the lender would be liable to be taxed u/s 41(1) of the Act or not. We notice that this is legal issue. Further a perusal of Profit and Loss account would show that the assessee has credited the P & L account with the waiver of interest portion and waiver of principle portion of loan. A perusal of the computation of total income would show that the assessee has not excluded principal portion of loan waived from the Net profit shown in the Profit and Loss account. Hence all facts relating to this issue is available on record.Accordingly, following the decision rendered by Hon’ble Supreme Court in the case of NTPC Ltd (supra), we admit this alternative contention.
The Ld A.R submitted before us that the assessee had taken loan in the earlier years from a group concern named M/s Tikona Digital networks P Ltd and the loan proceeds were utilized for purchasing shares. Hence the loan was not a working capital loan. In the case of term loans, the principal portion of loan is not allowed as deduction while computing total income. Hence the provisions of sec. 41(1) are not attracted in case of waiver of principal portion of loan. In this regard, we take support from the decision rendered by Hon’ble Supreme Court in the case of Mahindra and Mahindra Ltd (supra).The relevant observations made by Hon’ble Supreme Court in the above said case are extracted below:-
AY- 2018-19 Tikona Trust, Mumbai “……The short but cogent issue in the instant case arises whether waiver of loan by the creditor is taxable as a perquisite under Section 28 (iv) of the IT Act or taxable as a remission of liability under Section 41 (1) of the IT Act. 12) The first issue is the applicability of Section 28 (iv) of the IT Act in the present case. Before moving further, we deem it apposite to reproduce the relevant provision herein below: “28. Profits and gains of business or profession.—The following income shall be chargeable to income-tax under the head “Profits and gains of business profession”,-x x x (iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession; x x x” 13) On a plain reading of Section 28 (iv) of the IT Act, prima facie, it appears that for the applicability of the said provision, the income which can be taxed shall arise from the business or profession. Also, in order to invoke the provision of Section 28 (iv) of the IT Act, the benefit which is received has to be in some other form rather than in the shape of money. In the present case, it is a matter of record that the amount of Rs. 57,74,064/- is having received as cash receipt due to the waiver of loan. Therefore, the very first condition of Section 28 (iv) of the IT Act 9which says any benefit or perquisite arising from the business shall be in the form of benefit or perquisite other than in the shape of money, is not satisfied in the present case. Hence, in our view, in no circumstances, it can be said that the amount of Rs 57,74,064/- can be taxed under the provisions of Section 28 (iv) of the IT Act. 14) Another important issue which arises is the applicability of the Section 41 (1) of the IT Act. The said provision is re-produced as under: “41. Profits chargeable to tax.- (1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter AY- 2018-19 Tikona Trust, Mumbai referred to as the first-mentioned person) and subsequently during any previous year, (a) the first-mentioned person has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not; or x x x” 15) On a perusal of the said provision, it is evident that it is a sine qua non that there should be an allowance or deduction claimed by the assessee in any assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee. Then, subsequently, during any previous year, if the creditor remits or waives any such liability, then the assessee is liable to pay tax under Section 41 of the IT Act. The 10objective behind this Section is simple. It is made to ensure that the assessee does not get away with a double benefit once by way of deduction and another by not being taxed on the benefit received by him in the later year with reference to deduction allowed earlier in case of remission of such liability. It is undisputed fact that the Respondent had been paying interest at 6 % per annum to the KJC as per the contract but the assessee never claimed deduction for payment of interest under Section 36 (1) (iii) of the IT Act. In the case at hand, learned CIT (A) relied upon Section 41 (1) of the IT Act and held that the Respondent had received amortization benefit. Amortization is an accounting term that refers to the process of allocating the cost of an asset over a period of time, hence, it is nothing else than depreciation. Depreciation is a reduction in the value of an asset over time, in particular, to wear and tear. Therefore, the deduction claimed by the Respondent in previous assessment years was due to the deprecation of the machine and not on the interest paid by it.
AY- 2018-19 Tikona Trust, Mumbai 16) Moreover, the purchase effected from the Kaiser Jeep Corporation is in respect of plant, machinery and tooling equipments which are capital assets of the Respondent. It is important to note that the said purchase amount had not been debited to the trading account or to the 11profit or loss account in any of the assessment years. Here, we deem it proper to mention that there is difference between ‘trading liability’ and ‘other liability’. Section 41 (1) of the IT Act particularly deals with the remission of trading liability. Whereas in the instant case, waiver of loan amounts to cessation of liability other than trading liability. Hence, we find no force in the argument of the Revenue that the case of the Respondent would fall under Section 41 (1) of the IT Act. 17) To sum up, we are not inclined to interfere with the judgment and order passed by the High court in view of the following reasons: (a) Section 28(iv) of the IT Act does not apply on the present case since the receipts of Rs 57,74,064/- are in the nature of cash or money. (b) Section 41(1) of the IT Act does not apply since waiver of loan does not amount to cessation of trading liability. It is a matter of record that the Respondent has not claimed any deduction under Section 36 (1) (iii) of the IT Act qua the payment of interest in any previous year. 18) In view of above discussion, we are of the considered view that these appeals are devoid of merits and deserve to be dismissed. Accordingly, the appeals are dismissed. All the other connected appeals are disposed off accordingly, leaving parties to bear their own cost .”
Accordingly, we hold that the principal portion of amount waived by the lender amounting to Rs.2,00,18,970/- credited to the Profit and Loss account is not liable AY- 2018-19 Tikona Trust, Mumbai to taxation under the Income tax Act. Accordingly, we direct the assessing officer to exclude this amount while computing total income of the assessee.
Other grounds urged by the assessee are either in general or consequential and hence they do not require adjudication.
In the result of the appeal of the assessee is partly allowed.