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“waiver of loan”

Business IncomeSection 41(1)Section 41(1)108 judgments

The decision most relied on for waiver of loan is CIT v. T.V. Sundaram Iyengar & Sons Ltd. (222 ITR 344), cited in 223 judgments on BharatTax.

Leading authorities on waiver of loan

CIT v. T.V. Sundaram Iyengar & Sons Ltd.
222 ITR 344 · 1996 · Supreme Court
223
citing judgments

Unclaimed deposits received in the course of trading transactions and sundry credit balances written back are taxable as business income under Section 41(1) of the Income-tax Act, 1961, as they constitute a cessation of trading liability.

CIT v. Mahindra & Mahindra Ltd.
404 ITR 1 · 2018 · Supreme Court
164
citing judgments

The waiver of a loan taken for acquiring capital assets is considered a capital receipt and is not taxable as income under Section 28(iv) of the Income Tax Act. The ruling distinguishes between the waiver of trading liabilities and capital liabilities for tax purposes.

Solid Containers Ltd. v. DCIT
308 ITR 417 · 2009 · High Court
74
citing judgments

The write-back or waiver of a loan obtained for business purposes constitutes taxable business income under Section 28. This applies even if no prior deduction was claimed, thereby not attracting Section 41(1).

Asst. Director of Inspection (Investigation) v. Kum. A.B. Shanthi
255 ITR 258 · 2002 · Supreme Court
61
citing judgments

The Supreme Court upholds the constitutional validity of Section 269SS of the Income Tax Act, 1961, which prohibits certain cash loans and deposits. This ruling is foundational for penalties under Section 271D and considering exemptions under Section 273B.

Chief CIT v. Kesaria Tea Company Limited
254 ITR 434 · 2002 · Supreme Court
59
citing judgments

For Section 41(1) of the Income Tax Act to apply, the mere expiry of the limitation period does not constitute cessation of liability; there must be an explicit act by the creditor, such as a release or admission of write-off, confirming that the liability has ceased without the possibility of revival.

CIT v. Ramaniyam Homes Pvt. Ltd.
384 ITR 530 · 2016 · High Court
48
citing judgments

Benefits received by a company from its business operations, such as waived loans not used for capital assets, are taxable under section 28(iv) of the Income-tax Act, 1961.

Logitronics P. Ltd. v. CIT
333 ITR 386 · 2011 · High Court
38
citing judgments

Waiver of a loan taken for trading purposes is taxable under section 41(1) of the Income Tax Act, 1961, as it amounts to a remission or cessation of a trading liability.

CIT v. Tosha International Ltd.
176 Taxmann 187 · 2009 · High Court
36
citing judgments

Waiver of loan principal or interest by banks/financial institutions is not taxable under Section 41(1) if the loan was not claimed as a deduction in earlier years. Such transactions are loan-based and do not fall under Section 2(24) or Section 28(iv) of the Income Tax Act.

Judgments citing waiver of loan

The Great Eastern Shipping Co. Ltd, Mumbai vs. Asst CIT Cir 5(3)(2), Mumbai

ITA 1596/MUM/2018[2013-14]Status: DisposedITAT Mumbai31 Jan 2024AY 2013-14
Section 143(3)Section 14ASection 43B

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘K’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER

The Great Eastern Shipping Company Ltd, Mumbai vs. Asst CIT Cir 5(3)(2), Mumbai

ITA 1129/MUM/2016[2011-12]Status: DisposedITAT Mumbai31 Jan 2024AY 2011-12
Section 143(3)Section 14ASection 43B

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘K’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER

Ardom Towergen (P) Ltd., New Delhi vs. DCIT, Circle-3(1), Delhi

In the result, appeal is allowed for statistical purposes

ITA 1543/DEL/2023[2017-18]Status: DisposedITAT Delhi15 Jan 2024AY 2017-18

Bench: Shri Saktijit Dey, Vice- & Shri Pradip Kumar Kediaassessment Year: 2017-18 Ardom Towergen (P) Ltd., Versus Dcit, Circle 3(1), Ed-93, F/F, Tagore Garden, Delhi New Delhi Pan: Aaacq2776J (Appellant) (Respondent) Assessee By : Sh. Gautam Jain, Advocate Revenue By : Sh. Kanav Bali, Sr. Dr Date Of Hearing : 03.01.2024 Date Of Pronouncement: 15.01.2024

For Appellant: Sh. Gautam Jain, AdvocateFor Respondent: Sh. Kanav Bali, Sr. DR
Section 36(2)(i)Section 37(1)

terms of which, the assessee and Quanta Power Solutions (India) Pvt. Ltd paid certain amounts to M/s. Team Sustain Ltd. in addition to waiver of loans including interest granted to M/s. Team Sustain Ltd. as per framework agreement. In terms with the settlement agreement, an amount of Rs.5

Sumangal Glass Pvt. Ltd., Bhachau vs. DCIT, Circle-4(1)(1), Ahmedabad

In the result, the appeal of the assessee is partly allowed for statistical purposes

ITA 2636/AHD/2017[2012-13]Status: DisposedITAT Ahmedabad12 Jan 2024AY 2012-13

Bench: Shri Waseem Ahmed & Shri Siddhartha Nautiyalआयकरअपीलसं./Ita No. 2636/Ahd/2017 धििाधरणवरध/Asstt. Year: 2012-2013 Sumangal Glass Pvt. Ltd., D.C.I.T, Plot No.617/1-618-620, Vs. Circle-4(1)(1), Nh-8A,Po.Samakhiyari Ahmedabad (Piprapati), Bhachau Taluka, Samakhiyari-370150. Pan: Aaics6992G

For Appellant: Shri Manish J Shah, with Shri Rushin Patel, ARsFor Respondent: Shri Ashok Kumar Suthar, Sr. DR
Section 194CSection 36(1)(va)Section 40

only. However, the assessee in the computation of income has reduced the same on the reasoning that such waiver of loan is not taxable under the provision of the Act. The assessee in support of such waiver of loan has also filed the confirmation from the party namely M/s Haryana ... waived off such huge amount of loan. As per the AO, the Auditor of the assessee has rightly qualified in his report that waiver of loan has been shown as income under the head income from other sources. Thus, the AO added

M/S. Grapecity India Pvt. Ltd., Delhi vs. DCIT, New Delhi

In the result, the appeal of the assessee is allowed for statistical

ITA 2724/DEL/2017[2010-11]Status: DisposedITAT Delhi14 Dec 2023AY 2010-11

Bench: SHRI SHAMIM YAHYA (Accountant Member), SHRI CHALLA NAGENDRA PRASAD (Judicial Member)

For Appellant: Shri Ashish Mendiratta, CAFor Respondent: Shri Sandeep Kr. Mishra, Sr. DR
Section 143Section 271(1)(c)Section 36Section 41

erred in confirming the addition of Rs.2,09,15,950/- to the income of the assessee, on account of waiver of loan under section 41 (1) of the Income Tax Act, 1961. 2. On the facts and circumstances of the case and in law the Ld. CIT (A) has erred ... purpose of acquisition of assets. The money received by the appellant company is held to be on revenue account, therefore, the waiver of loan by Botech International Inc. has resulted in cessation of liability for the assessee company u/s 41 (1) of the Act.” 4. Furthermore, in respect

Larsen & Toubro Ltd, Mumbai vs. DCIT RG 2(2), Mumbai

ITA 6589/MUM/2013[2004-05]Status: DisposedITAT Mumbai11 Dec 2023AY 2004-05
For Appellant: Shri J. D. Mistry, Sr. AdvocateFor Respondent: Dr. Yogesh Kamat
Section 115JSection 143(3)Section 14ASection 40A(9)Section 80HSection 92C

Apex Court in the case of CIT vs. Mahindra & Mahindra Ltd.93 taxmann.com 32(SC) wherein the Apex Court has held that waiver of loan is a monetary benefit and, hence, it does not come within the ambit of section 28(iv) of the Act. Therefore, the amount of Rs.51 ... good law. The finding by the High Court that the provision of section 28(iv) of the 42 Act is applicable to a waiver of loan is contrary to the decision of Mahindra & Mahindra Ltd. (supra) wherein the Apex Court has held that waiver of loan being a monetary benefit

ITO Ward 17(1), New Delhi vs. Meyer Apparel Pvt. Ltd., Haryana

In the result, the appeal of Revenue is dismissed

ITA 6453/DEL/2019[2006-07]Status: DisposedITAT Delhi19 Oct 2023AY 2006-07

Bench: Shri C.M. Garg & Dr. B. R. R. Kumarito, Vs. Meyer Apparel Pvt. Ltd, Ward-17(1), 42, Milestone Delhi Jaipur Highway, New Delhi Kherki Daula, Gurgaon (Appellant) (Respondent) Pan: Aaach3928L

For Appellant: Shri V. K. Bindal, CAFor Respondent: Ms. Smita Singh, Sr. DR
Section 28

Court have held that the scope of section 28(iv) is restricted to non-monetary benefits received during the course of business whereas waiver of loan is akin to receipt of money. In the said case the Hon'ble Supreme have held as under: • "The term 'loan' generally refers ... waiver of part of the principal or interest repayable, or a complete waiver of both the loan as well as interest amounts Hence, waiver of loan by the creditor results in the debtor having extra cash in his hand. It 1s receipt in the hands of the debtor/assesse, The short

S T I India Ltd., Indore vs. ACIT-5(1), Indore

Appeals are disposed of as under:

ITA 850/IND/2019[2013-14]Status: DisposedITAT Indore24 Aug 2023AY 2013-14

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

actual cost of the asset to the assessee.” 14. Ld. AR submitted that the revenue’s stand is such that the waiver of loan obtained by assessee under OTS falls within “reduced by that portion of the cost thereof, if any, as has been met directly or indirectly ... part of cost was financed by borrowal from bank, the whole cost is met by assessee himself and not by bank. The subsequent waiver of loan by bank under OTS is altogether a different event and the revenue is unnecessarily getting confused. Ld. AR submitted that it will be stretching

ACIT-5(1), Indore vs. S T I India Ltd., Indore

Appeals are disposed of as under:

ITA 784/IND/2019[2013-14]Status: DisposedITAT Indore24 Aug 2023AY 2013-14

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

actual cost of the asset to the assessee.” 14. Ld. AR submitted that the revenue’s stand is such that the waiver of loan obtained by assessee under OTS falls within “reduced by that portion of the cost thereof, if any, as has been met directly or indirectly ... part of cost was financed by borrowal from bank, the whole cost is met by assessee himself and not by bank. The subsequent waiver of loan by bank under OTS is altogether a different event and the revenue is unnecessarily getting confused. Ld. AR submitted that it will be stretching

ACIT-5(1), Indore vs. S T I India Ltd., Indore

Appeals are disposed of as under:

ITA 24/IND/2019[2015-16]Status: DisposedITAT Indore24 Aug 2023AY 2015-16

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

actual cost of the asset to the assessee.” 14. Ld. AR submitted that the revenue’s stand is such that the waiver of loan obtained by assessee under OTS falls within “reduced by that portion of the cost thereof, if any, as has been met directly or indirectly ... part of cost was financed by borrowal from bank, the whole cost is met by assessee himself and not by bank. The subsequent waiver of loan by bank under OTS is altogether a different event and the revenue is unnecessarily getting confused. Ld. AR submitted that it will be stretching

ACIT-5(1), Indore vs. S T I India Ltd., Indore

Appeals are disposed of as under:

ITA 23/IND/2019[2014-15]Status: DisposedITAT Indore24 Aug 2023AY 2014-15

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

actual cost of the asset to the assessee.” 14. Ld. AR submitted that the revenue’s stand is such that the waiver of loan obtained by assessee under OTS falls within “reduced by that portion of the cost thereof, if any, as has been met directly or indirectly ... part of cost was financed by borrowal from bank, the whole cost is met by assessee himself and not by bank. The subsequent waiver of loan by bank under OTS is altogether a different event and the revenue is unnecessarily getting confused. Ld. AR submitted that it will be stretching

ACIT-5(1), Indore vs. S T I India Ltd., Indore

Appeals are disposed of as under:

ITA 22/IND/2019[2012-13]Status: DisposedITAT Indore24 Aug 2023AY 2012-13

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

actual cost of the asset to the assessee.” 14. Ld. AR submitted that the revenue’s stand is such that the waiver of loan obtained by assessee under OTS falls within “reduced by that portion of the cost thereof, if any, as has been met directly or indirectly ... part of cost was financed by borrowal from bank, the whole cost is met by assessee himself and not by bank. The subsequent waiver of loan by bank under OTS is altogether a different event and the revenue is unnecessarily getting confused. Ld. AR submitted that it will be stretching

S T I India Ltd., Indore vs. ACIT-5(1), Indore

Appeals are disposed of as under:

ITA 13/IND/2019[2015-16]Status: DisposedITAT Indore24 Aug 2023AY 2015-16

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

actual cost of the asset to the assessee.” 14. Ld. AR submitted that the revenue’s stand is such that the waiver of loan obtained by assessee under OTS falls within “reduced by that portion of the cost thereof, if any, as has been met directly or indirectly ... part of cost was financed by borrowal from bank, the whole cost is met by assessee himself and not by bank. The subsequent waiver of loan by bank under OTS is altogether a different event and the revenue is unnecessarily getting confused. Ld. AR submitted that it will be stretching

S T I India Ltd., Indore vs. ACIT-5(1), Indore

Appeals are disposed of as under:

ITA 12/IND/2019[2014-15]Status: DisposedITAT Indore24 Aug 2023AY 2014-15

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

actual cost of the asset to the assessee.” 14. Ld. AR submitted that the revenue’s stand is such that the waiver of loan obtained by assessee under OTS falls within “reduced by that portion of the cost thereof, if any, as has been met directly or indirectly ... part of cost was financed by borrowal from bank, the whole cost is met by assessee himself and not by bank. The subsequent waiver of loan by bank under OTS is altogether a different event and the revenue is unnecessarily getting confused. Ld. AR submitted that it will be stretching

S T I India Ltd., Indore vs. ACIT-5(1), Indore

Appeals are disposed of as under:

ITA 11/IND/2019[2012-13]Status: DisposedITAT Indore24 Aug 2023AY 2012-13

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

actual cost of the asset to the assessee.” 14. Ld. AR submitted that the revenue’s stand is such that the waiver of loan obtained by assessee under OTS falls within “reduced by that portion of the cost thereof, if any, as has been met directly or indirectly ... part of cost was financed by borrowal from bank, the whole cost is met by assessee himself and not by bank. The subsequent waiver of loan by bank under OTS is altogether a different event and the revenue is unnecessarily getting confused. Ld. AR submitted that it will be stretching

Luxor Writing Instruments Pvt. Ltd., New Delhi vs. DCIT Circle-4(1), New Delhi

The appeals are dismissed

ITA 6898/DEL/2019[2002-03]Status: HeardITAT Delhi02 Aug 2023AY 2002-03

Bench: Sh. N. K. Billaiya & Ms. Astha Chandraassessment Year: 2002-03

Section 28Section 36Section 41Section 41(1)

Pursuant to the directions of the Tribunal, in the fresh assessment proceedings the assessee once again contended that the waiver of loan basically constituted capital receipts and that the waiver was by the holding company of the share holder, hence section 41(1) of the Act is inapplicable irrespective ... revenue receipt. Since, the assessee now does not have to repay the sum received it changes the character of receipt. The act of waiver of loan is a subsequent event, which imprints a different quality on receipt. The loan so waived off was basically for the purpose of working capital

Dcm Shriram Industries Ltd., New Delhi vs. DCIT, New Delhi

In the result, the appeals of the assessee are disposed off as above

ITA 375/DEL/2015[2005-06]Status: DisposedITAT Delhi26 Jul 2023AY 2005-06

Bench: Sh. G. S. Pannu & Sh. Amit Shuklaassessment Year: 2004-05 Assessment Year: 2005-06 & Assessment Year: 2006-07 Dcm Shriram Industries Ltd. The Dcit 6Th Floor, Kanchanjunga Circle 7(1), Building New Delhi 18, Barakhamba Road, New Delhi-110001 Assessee By: Sh. Pradeep Dinodia, F.C.A. Sh. R. K. Kapoor F. C. A. Department By: Sh. Dilip Singh Kothari Cit-Dr Date Of Hearing .06.2023 Date Of Pronouncement 26.07.2023 1. The Aforesaid Appeals Have Been Filed By The Assessee Against Orders Passed By Ld. Cit (A) Vide The Common Order Dated 22.09.2014 For The A. Y. 2004-05 & A. Y. 2005-06 (I.E., Appeal Nos. 409 To 410/13-14/1560 To 1561) Appeal Relating To A. Y. 2006-07, Is Against Order Dated 07.12.2011 (Appeal No. 419/08- 09/118) For The Quantum Of Assessment Passed U/S 143(3) Of The Income Tax Act. In All These Appeals Identical Grounds Of Appeals Have Been Raised Against Certain Common Issues On The Additions 1

For Appellant: Sh. Pradeep Dinodia, F.C.AFor Respondent: Sh. Dilip Singh Kothari CIT-DR
Section 132Section 132(4)Section 133ASection 143(3)Section 153A(2)Section 153CSection 69C

regular books of accounts, yet for the purpose of filing the Income Tax Return, such amount was treated in the capital field because waiver of loan obtained by the assessee which loan is utilized towards capital assets has been held to be non-taxable receipt. The assessee had strongly relied ... make any reference to the order of Hon’ble ITAT which was passed in December 2018. 17. As regards the issue of waiver of loan which the assessee has treated in the capital field, Ld. DR submitted that possibility of some of the proceeds from the issue of NCDs having

Dcm Shriram Industries Ltd., New Delhi vs. DCIT, New Delhi

In the result, the appeals of the assessee are disposed off as above

ITA 374/DEL/2015[2004-05]Status: DisposedITAT Delhi26 Jul 2023AY 2004-05

Bench: Sh. G. S. Pannu & Sh. Amit Shuklaassessment Year: 2004-05 Assessment Year: 2005-06 & Assessment Year: 2006-07 Dcm Shriram Industries Ltd. The Dcit 6Th Floor, Kanchanjunga Circle 7(1), Building New Delhi 18, Barakhamba Road, New Delhi-110001 Assessee By: Sh. Pradeep Dinodia, F.C.A. Sh. R. K. Kapoor F. C. A. Department By: Sh. Dilip Singh Kothari Cit-Dr Date Of Hearing .06.2023 Date Of Pronouncement 26.07.2023 1. The Aforesaid Appeals Have Been Filed By The Assessee Against Orders Passed By Ld. Cit (A) Vide The Common Order Dated 22.09.2014 For The A. Y. 2004-05 & A. Y. 2005-06 (I.E., Appeal Nos. 409 To 410/13-14/1560 To 1561) Appeal Relating To A. Y. 2006-07, Is Against Order Dated 07.12.2011 (Appeal No. 419/08- 09/118) For The Quantum Of Assessment Passed U/S 143(3) Of The Income Tax Act. In All These Appeals Identical Grounds Of Appeals Have Been Raised Against Certain Common Issues On The Additions 1

For Appellant: Sh. Pradeep Dinodia, F.C.AFor Respondent: Sh. Dilip Singh Kothari CIT-DR
Section 132Section 132(4)Section 133ASection 143(3)Section 153A(2)Section 153CSection 69C

regular books of accounts, yet for the purpose of filing the Income Tax Return, such amount was treated in the capital field because waiver of loan obtained by the assessee which loan is utilized towards capital assets has been held to be non-taxable receipt. The assessee had strongly relied ... make any reference to the order of Hon’ble ITAT which was passed in December 2018. 17. As regards the issue of waiver of loan which the assessee has treated in the capital field, Ld. DR submitted that possibility of some of the proceeds from the issue of NCDs having

Dcm Shriram Industries Ltd., New Delhi vs. DCIT, New Delhi

In the result, the appeals of the assessee are disposed off as above

ITA 641/DEL/2012[2006-07]Status: DisposedITAT Delhi26 Jul 2023AY 2006-07

Bench: Sh. G. S. Pannu & Sh. Amit Shuklaassessment Year: 2004-05 Assessment Year: 2005-06 & Assessment Year: 2006-07 Dcm Shriram Industries Ltd. The Dcit 6Th Floor, Kanchanjunga Circle 7(1), Building New Delhi 18, Barakhamba Road, New Delhi-110001 Assessee By: Sh. Pradeep Dinodia, F.C.A. Sh. R. K. Kapoor F. C. A. Department By: Sh. Dilip Singh Kothari Cit-Dr Date Of Hearing .06.2023 Date Of Pronouncement 26.07.2023 1. The Aforesaid Appeals Have Been Filed By The Assessee Against Orders Passed By Ld. Cit (A) Vide The Common Order Dated 22.09.2014 For The A. Y. 2004-05 & A. Y. 2005-06 (I.E., Appeal Nos. 409 To 410/13-14/1560 To 1561) Appeal Relating To A. Y. 2006-07, Is Against Order Dated 07.12.2011 (Appeal No. 419/08- 09/118) For The Quantum Of Assessment Passed U/S 143(3) Of The Income Tax Act. In All These Appeals Identical Grounds Of Appeals Have Been Raised Against Certain Common Issues On The Additions 1

For Appellant: Sh. Pradeep Dinodia, F.C.AFor Respondent: Sh. Dilip Singh Kothari CIT-DR
Section 132Section 132(4)Section 133ASection 143(3)Section 153A(2)Section 153CSection 69C

regular books of accounts, yet for the purpose of filing the Income Tax Return, such amount was treated in the capital field because waiver of loan obtained by the assessee which loan is utilized towards capital assets has been held to be non-taxable receipt. The assessee had strongly relied ... make any reference to the order of Hon’ble ITAT which was passed in December 2018. 17. As regards the issue of waiver of loan which the assessee has treated in the capital field, Ld. DR submitted that possibility of some of the proceeds from the issue of NCDs having

DCIT - 19(3), Mumbai vs. M/S. Ramani Exports, Mumbai

In the result, appeal of the Revenue are dismissed and cross objection filed by the assesses are allowed

ITA 609/MUM/2023[2013-14]Status: DisposedITAT Mumbai16 May 2023AY 2013-14

Bench: Shri Amit Shukla, Jm & Ms. Padmavathy S, Am आयकरअपीलसं./ I.T.A. No.609 & 608/Mum/2023 (निर्धारणवर्ा / Assessment Year 2013-14 & 2014-15) Dcit-19 (3). M/S. Ramani Exports. Matru Mandir, 2Nd Floor, 6/B, Shreeji Darshan, Tata बिधम/ Room No. 206, Grant Road, No. 01 & 02, Opera Road. Mumbai-400 006 House. Mumbai-400 004 Vs.

For Appellant: Shri. Bhupendra Shah, CAFor Respondent: Smt. Mahita Nair (Sr. Ar. CIT)
Section 143(3)Section 21Section 41Section 41(1)(a)

capital in nature. Hon’ble Supreme Court in the case of Mahindra and Mahindra Ltd (Supra), while deciding the issue of waiver of loan, whether constitute income either u/s.41(1) or u/s. 21 (IV) of the Act. The principle laid down by the Hon‟ble Supreme Court in the said ... waiver of part of the principal or interest repayable, or a complete waiver of both the loan as well as interest amounts. Hence, waiver of loan by the creditor results in the debtor having extra cash in his hand. It is receipt in the hands of the debtor/assessee. The short