Income Tax Appellate Tribunal - Vizag
Coastal Corporation Limited vs J.C.I.T. on 30 May, 2008
ORDER
B.R. Baskaran, Accountant Member
1. This appeal by the assessee company is directed against the order dt. 10.8.2006 passed by the Commissioner of Income Tax (Appeals)-I, Visakhapatnam, and it pertains to the assessment year 1998-99.
2. Though the assessee has raised number of grounds and sub-grounds, they in effect give rise to only two issues; i.e.,
(a) Whether the Assessing Officer is justified in re-opening the assessment under Section 147 beyond four years from the end of assessment year;
(b) Whether the amount representing waiver of part of loan taken from the SCICI (successor of SDFC), would give rise to income taxable under Section 41(1) of the Income Tax Act.
3. The facts necessary for the disposal of this appeal are stated in brief. The assessee is engaged in the business of Deep Sea Fishing and export of the same. In respect of the previous year relevant to assessment year 1998-99, it declared total income of Rs. 1,49,67,491/- on 30.11.1998 before setting off of various losses and depreciation. The assessment was completed under Section 143(3) of the Act by determining the income as per the provisions of Section 115-JA of the Act.
4. The assessee company had acquired four trawlers in the in the year 1985 by availing loan of Rs. 3.18 crores from Shipping Development Fund Committee (SDFC) which was abolished subsequently and in its place Shipping Credit and Investment Company of India (SCICI) was appointed as a designated person to hold the assets. The total amount due towards principal amount of loan was Rs. 3,30,99,944/- including capitalized interest of Rs. 12,59,187/-. As most of the industries engaged in export of shrimp suffered heavy losses, SCICI offered a package of one-time settlement of loan and upon availing the package, the assessee company paid Rs. 1,04,37,405/- as against its total liability of Rs. 3,28,59,805/-. In effect, the assessee's liability to the extent of Rs. 2,24,22,400/- was waived by SCICI. The assessee credited the same to the capital reserve account. One-time settlement procedure was concluded during the previous year relevant to the assessment year 1998-99 and therefore, the question arose as to whether the benefit obtained therein was assessable to tax under Section 41(1) of the Act during that year. The assessee had claimed depreciation on the trawlers, which were purchased with the aid of the loan taken from SCICI. However, upon waiver of loan as a one-time settlement package, the assessee was of the view that it is not directly related to any expenditure claimed as deduction in any of the preceding years and therefore it cannot be assessed to tax under Section 41(1) of the Act and thus not offered the said amount as income of the year under consideration. However, the assessee appended following note in its Annual Report, containing Balance Sheet and Profit and Loss Account, filed along with the return of income.
Consequent to approval of Rehabilitation Scheme by the Government of India, the company has opted for One Time Settlement of Term Loans with interest thereon. Pursuant to the scheme, the company had paid a sum of Rs. 114.81 Lakhs in full settlement of the Term Loans with interest. As a result of this, interest provided in earlier years to the tune of Rs. 160.77 lakhs was written back. A sum of Rs. 224.22 lakhs representing reduction of principal amount payable was transferred to capital reserve.
According to the assessee, the information with regard to the settlement of loan was disclosed while completing the assessment on 29.3.2001. The Assessing Officer observed in paragraph 9 of his order that the interest payable to the Shipping Development Fund Committee was allowed on actual payment to the extent of Rs. 4,72,962/- in the year 1991-92 and therefore consequent on the waiver of interest allowed by the SCICI as a measure of one-time settlement of the loan due to the assessee company, a sum of Rs. 4,72,962/- has to be considered as income of this year. Though paragraph-9 indicates that the Assessing Officer is in the knowledge of the fact that there was one-time settlement of loan, the issue regarding whether the waiver of loan amount (other than interest) would amount to cessation of trading liability under Section 41(1) of the Act was not specifically considered by the Assessing Officer.
5. Subsequently, it was noticed that the assessee claimed deduction by way of depreciation on the trawlers which in turn were acquired by availing the loan of Rs. 3,30,99,944/- and upon waiver of a part of the said loan, the assessee's liability seized to exist during the current previous year and the benefit of depreciation claimed in the earlier years was more than the benefit derived now by way of remission of the loan and thus the impugned amount has escaped assessment. Accordingly, a notice was issued under Section 148 of the Act on 24.3.2005 with the prior approval of the Commissioner of Income Tax-I, Visakhapatnam, with a view to bring to tax the impugned amount under Section 41(1) of the Act.
6. In response to the notice, the assessee submitted that it has already filed its return of income on 30.11.1998. Subsequently, the case was taken up for scrutiny. During the course of assessment proceedings the assessee argued that waiver of principal amount cannot be considered as income as it is capital in nature and relied upon the following decisions to contend that allowance of depreciation cannot be equated with deduction in respect of "loss, expenditure or trading liability" and therefore depreciation allowed cannot be brought back to tax on the ground that its depreciation claimed till date exceeds the amount of loan waived.
(i) Mahindra & Mahindra Ltd. v. CIT 128 Taxman 394 (Bom)
(ii) CIT v. Chetan Chemicals (P) Ltd. 139 Taxman 301 (Guj.)
(iii) APR Ltd. v. Dy. CIT 87 ITD 618 (Hyd)
(iv) Impact (P) Ltd. v. ITO 91 ITD 354 (Del.) Before the Assessing Officer, the appellant did not raise any objection regarding the validity of reopening of assessment proceeding.
7. The Assessing Officer was of the view that the afore-cited case laws and decisions are not applicable to the facts of the present case and strongly relying upon the decision of the Hon'ble Bombay High Court in the case of Nectar Beverages P. Ltd. v. D.C.I.T. (Assessments) 267 ITR 385 he concluded that the claim of deduction towards depreciation is in the nature of expenditure as it reduced the liability of the assessee to pay income tax on such amount and thus upon waiver of the loan liability which was utilized for purchase of the asset, the consequent depreciation claimed thereon can be said to have been recovered by the assessee and therefore provisions of Section 41(1) of the Act are applicable. Accordingly, he brought to tax the impugned loan waiver amount of Rs. 2,24,22,400/- in the assessment completed under Section 143 read with Section 147 of the Act.
8. Aggrieved, the assessee carried the matter in appeal before the learned CIT(A). Before the first appellate authority, in addition to disputing on the taxability of waived loan amount, the assessee also raised the issue regarding the validity of reopening of the assessment by placing its reliance on the following decisions.
i. Tantia Construction Co. Ltd. v. D.C.I.T. 177 CTR 419 (Cal.) ii. Mahalakshmi Motors Ltd. v. D.C.I.T. 265 ITR 53 (AP) iii. Amiya Sales & Industries v. A.C.I.T. 274 ITR 25 (Cal.) iv. C.I.T. v. Foramer France 264 ITR 566 (SC) v. Parikh Petrol Chemical Agencies (P) Ltd. v. C.I.T. 129 ITR 572 (Bom.) vi. C.I.T. v. A.R. Enterprises (P) Ltd. 126 Taxman 49 (Raj) vii. G.N. Shaw (Wine) P. Ltd. v. I.T.O. 260 ITR 513 (Cal.)
9. As the matter relating to validity of reopening was not raised before the Assessing Officer, learned CIT(A) called for the remand report from the Assessing Officer. The substance of the remand report furnished by A.O. is given below.
(a) Mere submission of accounts or other information does not amount to full and true disclosure.
(b) The term-loan from SCICI has been utilized to acquire four trawlers on which depreciation has been claimed from assessment year 1988-89 to 1997-98. These facts, i.e., utilization of amounts for buying the trawlers, depreciation claimed on them and the transaction of waiver of loan was not capital receipt, but a reduction in the expenditure on the capital items were not fully and truly disclosed by the appellant.
(c) In the original assessment, the issue relating to waiver of term-loan was not considered.
(d) The A.O. relied upon the decision of Gujarat High Court in the case of Praful Chunilal Patel v. M.J. Makwana A.C.I.T. wherein the words "escaped assessment" have been explained to cover the case of discovery of a mistake in assessment caused by either an erroneous construction of transaction or due to its non-consideration.
10. After considering the remand report, the various case-laws, learned CIT(A) upheld the validity of the issue of notice under Section 148 on the following grounds.
(i) The justification for belief is not to be judged from the standard of proof required for coming to a final decision. If the Assessing Officer has a cause or justification to think or suppose that the income has escaped assessment, he can be said to have a reason to believe that such income had escaped assessment. His formation of belief is not a judicial decision but an administrative decision.
(ii) While completing the assessment under Section 143(3) of the Act on 29.3.2001, no question was raised regarding the impugned transaction relating to waiver of loan as well as interest.
(iii) The facts relating to utilization of impugned loan for acquisition of trawlers and claim of depreciation on such trawlers for different assessment years were not disclosed by the assessee.
(v) If the Assessing Officer honestly comes to a conclusion that a mistake has been made, it matters nothing so far as his jurisdiction to initiate the proceedings under Section 147 of the Act is concerned Praful Chunilal Patel (supra).
(vi) The Hon'ble Bombay High Court in the case of Dr. Amin's Pathology Laboratory v. J.C.I.T. 252 ITR 673 (Bom.) has observed that mere production of account books from which material evidence could have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the proviso to Section 147 of the Act.
(vii) In the original assessment proceedings the Assessing Officer basically examined the applicability of Section 43B of the Act to the unpaid interest liability and a reference made to one-time settlement was only a passing reference and that aspect was never examined by the Assessing Officer.
11. Aggrieved, the assessee is in appeal before us. The learned Authorized Representative adverted our attention to the proviso to Section 147 of the Act according to which in a case where the assessment has been completed Under Section 143(3) of the Act, no action shall be taken under Section 147 of the Act after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee...to disclose fully and truly all material facts necessary for his assessment. In this connection, he submitted that the fact of waiver of loan amount has been duly disclosed in its annual report filed along with the return of income and as the assessee has disclosed all material facts, by virtue of the proviso referred above, the Assessing Officer is precluded from reopening the assessment after the expiry of four years. He further submitted that the Assessing Officer has considered the matter of waiver in the original assessment order when he was dealing with the taxability of interest and hence his action of issuing the notice under Sectionl48 of the Act after a period of four years is due to the change in the opinion of the Assessing Officer, which cannot be a basis for issuing notice under Section 148 of the Act. He placed his reliance on the decision of the Hon'ble jurisdictional High Court in the case of Mahalaxmi Motors Ltd. (supra) wherein the Hon'ble High Court considered the effect of disclosure in the annual report and held that the issue of notice under Section 148 is invalid. He further submitted that though the learned CIT(A) referred to the decision of Hon'ble Bombay High Court in the case of Dr. Amin's Pathology Laboratory (supra), in view of the decision of the jurisdictional High Court, learned CIT(A) is precluded from following the decision of the Bombay High Court. He further submitted that the decision of Hon'ble Gujarat High Court in the case of Praful Chunilal Patel (supra) does not apply to the present case as that was case of reopening within four years. He also submitted that the decision of the Hon'ble Bombay High Court in the case of Citibank N.A. v. S.K. Ojha and Ors. (Bom.) also does not apply as that case revolves around on different set of facts. He further invited our attention to the decision of the jurisdictional High Court in the case of C.I.T. v. Jeskaran Bhuvalka wherein the Hon'ble High Court has specifically held that "so far as primary facts are concerned, it is the assessee's duty to disclose all of them including particular entries in books, particular portions of documents, and documents and other evidence which could have been discovered by the assessing authority, from the documents and other evidence disclosed. The duty, however, did not extend beyond the full and truthful disclosure of all primary facts. Once all the primary facts were before the assessing authority, it was for him to decide what inferences of facts could be reasonably drawn and what legal inferences had ultimately to be drawn. It was not for anybody else - far less the assessee - to tell the assessing authority what inferences, whether of facts or law, should be drawn." He further amplified the meaning of material primary facts as under.
The 'material facts' which an assessee is required to disclose at the time of his assessment are primary facts material and necessary for the purpose of his assessment. The 'primary facts' which are required to be disclosed must be material or relevant to the decision of the question before the assessing authority so that their non-disclosure could have a material bearing on the question of escapement of income from assessment. Only when this requirement is satisfied, 'primary facts' can be said to be 'material facts' within the meaning of Section 34(1)(a).
Accordingly, he submitted that the assessee has fully disclosed all the material facts during the course of original assessment proceedings itself and after lapse of four years, the Assessing Officer is not entitled to issue notice under Section 148 of the Act as there is no failure on the part of the assessee to disclose fully and truly all the material facts.
12. On the contrary, learned Departmental Representative invited our attention to explanation (1) to Section 147 of the Act, according to which production before the Assessing Officer of account books or other evidence from which material evidence could, with due diligence, have been discovered by the Assessing Officer, will not necessarily amount to disclosure within the meaning of the impugned proviso. Further, he submitted that the learned CIT(A) has considered all the legal aspects of the decisions relied upon by the assessee before upholding the validity of reopening. Accordingly, he supported the order of the learned CIT(A).
13. We heard the rival contentions and perused the record. The proviso to Section 147 of the Act specifically states that where an assessment has been made under Section 143(3) or under Section 147 of the Act for any assessment year, reopening of such assessment after expiry of four years from the end of the relevant assessment year shall be made only if there is a failure on the part of the assessee, amongst other things, to disclose fully and truly all material facts necessary for his assessment for that year. Explanation (1) to Section 147 of the Act specifically states that the production before the Assessing Officer of account books or other evidence from which material evidence could, with due diligence, have been discovered by the Assessing Officer, will not necessarily amount to disclosure within the meaning of the proviso. So, before adjudicating the issue before us regarding the validity of the notice issued under Section 148 of the Act, we will have to decide whether the assessee has disclosed fully and truly all the material facts before the Assessing Officer in the original assessment proceedings.
14. The assessee strongly relies upon the decision of the jurisdictional High Court in the case of Mahalaxmi Motors Ltd. (supra). In that case, the claim of the assessee regarding loss on account of fall in the value of shares held as current asset was originally allowed by the Assessing Officer in the original assessment proceedings. Subsequently, block assessment proceedings were commenced consequent to the search on the assessee and after completion of block assessment proceedings; the assessee filed an application before the Income Tax Settlement Commission and received the orders also. In the meantime, the Department took the view that loss arising on account of fall in the share value is a speculative loss, which could not be set off against the business income of the assessee and accordingly a petition was filed before the Settlement Commission in this connection which was dismissed by the Settlement Commission. Consequent to that, the Department issued a notice Under Section 148 of the Act for reopening the assessment. Against this notice, the assessee filed a writ petition before the Hon'ble A.P. High Court questioning the validity of the notice. The Hon'ble A.P. High Court allowed the petition of the assessee on the ground that the assessee has furnished all materials in this connection before the Assessing Officer. We find that in this case, the claim of the assessee regarding loss on account of fall in the value of shares has been originally considered and allowed by the Assessing Officer and the assessee has also furnished all details in that connection in the documents filed along with the return of income.
15. However, in the present case under consideration, the facts are different. The waiver of loan by SCICI consisted of two parts, i.e., (i) waiver of principal portion and (ii) waiver of interest portion. The assessee duly offered the waiver of interest portion in its return of income. In earlier years the assessee's claim of interest on the above said loan had been disallowed Under Section 43B of the Act. Hence the assessee claimed deduction of interest amount that was disallowed under Section 43B of the Act in earlier years. To that extent the Assessing Officer verified the claim of the assessee and found that the above claim is in excess by about Rs. 4 lakhs and accordingly reduced the claim by that amount. However, the Assessing Officer did not go into the details in connection with the waiver of principal portion or its taxability. The assessee had disclosed the facts regarding waiver of principal portion and credit of that amount in Capital Reserve a/c in the Annual report in the schedule containing the notes forming part of accounts.
16. Now the question before us is that whether such disclosure in the Annual report would amount to full and true disclosure of all material facts. In this connection, it is pertinent to note the decision of the Hon'ble Supreme Court in the case of Kantamani Venkata Narayana & Sons. v. ITO (Addl.) wherein it was observed as under:
It is the assessee's duty to bring to the notice of the Assessing Officer particular items in the books of account or portions of documents which are relevant. The assessee's omission to bring to the attention of the Assessing Officer the particular items in the accounts books or the particular positions of the documents which are relevant will amount to non-disclosure of material facts within the meaning of Section 147(a).
In the present case also, though the assessee has given a note regarding the waiver of principal portion of loan, it was not brought to the notice of the Assessing Officer by the assessee. The Assessing officer has also not dealt with the matter of waiver of principal portion and its taxability in the original assessment proceeding. Hence Explanation 1 to Section 147 will apply to the present case and hence it cannot be said that there is no failure on the part of the assessee to disclose fully and truly all material facts. The decision of the Hon'ble jurisdictional High Court in the case of Mahalaxmi Motors Ltd. (supra) is distinguishable as the Assessing Officer in that case has originally considered the claim of the assessee where as the A.O. in the present case has not considered the present issue and hence it cannot be termed as 'Change of opinion'. The Hon'ble A.P. High Court did not consider explanation (1) to Section 147, as it was not necessary in that case to consider the explanation. The Explanation (1) to Section 147 has been duly considered by the Bombay High Court in Dr. Amin's Pathology Laboratory (supra) while upholding the issue of notice under Section 148 of the Act.
17. In Mahalaxmi Motors Ltd. (supra) the Hon'ble A.P. High Court extracted the observations of the Hon'ble Supreme Court in the case of Sri Krishna (P) Ltd. v. I.T.O. and some of the above said observations in this connection are given below.
The enquiry at the stage of finding out whether the reassessment notice is valid is only to see whether there are reasonable grounds for the ITO to believe and not whether the omission/failure and the escapement of income is established. It is necessary to keep this distinction in mind.
Since the belief is that of the ITO, the sufficiency of reasons for forming the belief is not for the Court to judge but it is open to an assessee to establish that, in fact there existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that extent, the Court may look into the conclusion arrived at by the ITO and examine whether there was any material available on the record from which the requisite belief could be formed by the ITO and further whether that material had any rational connection or a live link for the formation of the requisite belief.
18. In the present case under consideration, the Assessing Officer did not made enquiries regarding taxability of principal portion waived. The assessee has also failed to bring the above facts to the notice of the Assessing Officer though the same has been mentioned in the Annual report. In view of the Honb'le Supreme Court decision referred supra and further in view of the Explanation 1 to Section 147, the note given in the Annual Report cannot be taken as full and true disclosure. Hence the belief of the assessing officer regarding escapement of income can be taken as reasonable one. The assessee has also not established that there existed no belief or the belief was not at all bonafide one. Hence, on a conspectus of the matter, we hold that the issue of notice under Section 148 is valid.
19. The next issue to be addressed is whether the waiver of principal part of the loan would give rise to income taxable under Section 41(1) of the Income Tax Act. The learned AR in this connection invited our attention to Hon'ble Supreme Court decision in the case of Polyflex (India) (P) Ltd. v. C.I.T. wherein the Hon'ble Supreme Court has held that the words "some benefit in respect of such trading liability by way of remission or cessation thereof" appearing in Section 41(1) of the Act should be read as a distinct and self-contained provision, and the words "has obtained, whether in cash or in any other manner whatsoever, any amount in respect of loss or expenditure" appearing in the same Section have to be read separately. Accordingly, he contended that remission or cessation of liability has to be read in relation to trading liability only. He further submitted that the waiver of principal portion of loan couldn't be taken as trading liability, as the impugned principal amount has never been claimed as expenditure or allowance under Income tax Act, In this connection, he relied upon the decision of Hon'ble Delhi High Court in the case of C.I.T. v. Phool ChandJiwan Ram wherein it has been held that only trading debts which are allowed as deduction in earlier yeas can only be treated as a trading liability. Accordingly, he submitted that the waiver of principal amount of loan cannot be brought to tax under Section 41(1) of the Act.
20. Next, he submitted that the tax authorities have proceeded under wrong interpretation of the provisions of Income tax Act by linking the Loan amount to the Depreciation claim. Depreciation is allowed on the 'actual cost' of the assets, which have been put to use for the purpose of business. Hence, the allowance of depreciation is nothing to do with the loan taken for purchasing the assets. Hence, remission of such loan cannot be reduced from the cost of machinery. In this connection he relied upon the decision of the Kerala High Court in the case of C.I.T. v. Cochin Co. (P) Ltd. . He further submitted that the learned CIT(A) has wrongly interpreted the decision of Hon'ble Bombay High Court in the case of Mahindra & Mahindra Ltd. (supra). Accordingly, he pleaded that the appeal of the assessee be allowed.
21. On the contrary, learned DR submitted that the assessee has purchased the assets by availing term loan and also has claimed depreciation on such assets. The amount of loan now waived is less than the depreciation amount claimed to the date. As there is nexus between purchase of fixed assets and availing of loan, waiver of the loan will amount to a benefit relatable to the depreciation claim and hence it is taxable under Section 41(1) of the Act. Accordingly, he supported the order of the tax authorities.
22. We heard the rival contentions and perused the records. Section 41(1) of the Act reads as under.
41(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 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;
Section 41(1) consists of two main ingredients viz., (a) "loss or expenditure" and (b) "trading liability". As per the decision of the Hon'ble Supreme Court in the case of Polyflex (India) (P) Ltd. (supra), the two components of Section 41(1) of the Act have to be read separately, namely (i) has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure; (ii) some benefit in respect of such trading liability by way of remission or cessation thereof. Accordingly the Hon'ble Apex Court held that the words "remission or cessation thereof" shall apply only to trading liability and it shall not apply to any loss or expenditure.
23. The next issue that arises is whether waiver of principal amount of loan would amount to trading liability? On this issue also, the Hon'ble Delhi High Court in Phool Chand Jiwan Ram (supra) has held that only trading debts, which are allowed as deduction in earlier years, can be treated as trading liability. It is not in dispute the principal portion of loan amount, which has been waived, has not been claimed as deduction in any of the years. Hence waiver of principal portion of loan cannot be termed as waiver of trading liability and hence the second Clause of Section 41(1), relating to trading liability, shall not apply to the present case under consideration.
24. The next issue to be addressed is, whether the waiver of loan will amount to a benefit relatable to depreciation expenditure claimed earlier? In this case, the assessee had obtained a loan of Rs. 3.18 crores from SCICI and acquired four trawlers by utilizing the above said loan. It had also claimed depreciation from 1988-89 to 1997-98 to the extent of Rs. 3.62 crores on the trawlers so acquired by availing the loan. The waiver of principal amount is Rs. 2.24 crores. Hence the department contends that the such waiver would give raise to the refund of benefit of depreciation claim allowed earlier. It is to be noted here that the depreciation under Section 32 of the Act is allowed on the "actual cost" of the assets. The term 'actual cost' has been defined in Section 43(1) of the Act, according to which, 'actual cost' means 'the actual cost of the assets to the assessee reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority.' So, the only deduction permissible from the actual cost is the amount, which has been met by any other person or authority. The words "which has been met by another person or authority" would mean the non-refundable amount given by any other person or authority for the purpose of meeting the cost of the asset. When a person avails a term loan, it has to be repaid along with the interest, if any, in accordance with the terms and conditions prescribed for that purpose. If the term loan is utilized for acquiring any asset, it cannot be termed as 'meeting of a portion of cost of the asset'. Loan is availed as a source of finance while the depreciation is allowed on the actual user of the asset. So 'availing of loan' and 'claim of depreciation' are two distinct things, which cannot be clubbed together. The Hon'ble Kerala High Court in the case of Cochin Co. (P) Ltd. (supra) has specifically held that remission of loan taken to purchase machinery cannot be reduced from the cost of machinery. Hence, we find no force in the contention of the Revenue that in view of nexus between the term loan and acquisition of assets, remission of loan will amount to remission of depreciation. The decision of Bombay High Court in the case of Mahindra & Mahindra Ltd. (supra) relied upon by the tax authorities will not support their contention as the Hon'ble Bombay High Court has not gone into the question of depreciation at all. Accordingly, we hold that the remission of principal portion of the loan cannot fall in the purview of the provisions of Section 41(1) of the Act. Accordingly, we reverse the decision of the learned CIT(A) in this regard.
25. In the result, the appeal filed by the assessee is allowed.
Pronounced accordingly on 30.5.2008.