M/S I G PETROCHEMICAL LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-3(1)(1), BANGALORE

ITA 1317/BANG/2018Status: DisposedITAT Bangalore21 January 2022AY 2006-0710 pages
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What did the Tribunal hold?

The Tribunal held that the waiver of the principal portion of term loans taken for capital assets is a capital receipt and not taxable. However, waiver of other types of loans like overdrafts, letters of credit, etc., used for day-to-day business operations, are considered revenue receipts and taxable.

What were the facts?

The assessee company had loans waived off by banks. The Assessing Officer treated the principal amount of these waived loans as income. The CIT(A) upheld this addition, relying on various High Court and Supreme Court decisions.

What were the issues?

Whether the waiver of principal loan amounts, particularly term loans for capital assets, constitutes taxable income. Whether waiver of other business-related loans is taxable as revenue receipt.

Which sections of the Income-tax Act were involved?

Section 2(24),Section 28(iv),Section 41(1)

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Income Tax Appellate Tribunal, “C’’ BENCH: BANGALORE

Before: SHRI N.V. VASUDEVAN & SHRI CHANDRA POOJARI

For Appellant: Shri S. Parthasarathi, A.R
For Respondent: Shri Pradeep Kumar, D.R
Hearing: 10.01.2022Pronounced: 21.01.2022

PER CHANDRA POOJARI, ACCOUNTANT MEMBER:

This appeal by the assessee is directed against the order of Ld. CIT(A)-3, Bengaluru dated 28.2.2018 for the assessment year 2006-07. The grounds raised by the assessee are as under:

1.

The CIT(A) erred in passing the impugned order in the manner which he did.

2.

The CIT(A) erred in not following the principles laid down by the Gujarat high Court in the case of CIT Vs Chetan Chemicals Private Limited 139 Taxman 301 (Guj ) and ought to have allowed the matter in full. M/s. I.G. Petrochemicals Ltd., Bangalore 3. On the facts and in the circumstanc

The order continues below.

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