Income Tax Appellate Tribunal - Bangalore
M/S I G Petrochemical Limited , ... vs Deputy Commissioner Of Income Tax ... on 30 May, 2024
MP No.47/Bang/2022
M/s. I.G. Petrochemicals Limited, Bangalore
IN THE INCOME TAX APPELLATE TRIBUNAL
"C'' BENCH: BANGALORE
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND
SMT. BEENA PILLAI, JUDICIAL MEMBER
M.P. No.47/Bang/2022
(Arising out of ITA No.1317/Bang/2018
Assessment Year: 2006-07
M/s. I.G. Petrochemicals Limited
D-4, Jyothi Complex DCIT
134/1, Infantry Road Circle-3(1)(1)
Vs.
Bangalore 560 001 Bangalore
PAN NO : AAACI4115R
APPELLANT RESPONDENT
Appellant by : Shri S. Ganesh, Sr. A.R.
Respondent by : Shri V. Parithivel, D.R.
Date of Hearing : 03.05.2024
Date of Pronouncement : 30.05.2024
ORDER
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
Originally, this Miscellaneous Petition came for consideration before this Tribunal. The Tribunal vide order dated 5.9.2022 held as under:
9. We have carefully considered the rival submissions. Copies of one time settlement with the Banks and various financial institutions are available in pages 110 to 130 of Assessee's paper book. A copy of reconciliation of payment made under OTS and write back for AY 2005-06 & 2006-07 is available at page 107 to 108 of the Assessee's paper book. The computation of total income for AY 2005-06 and 2006-07 is also available at pages 70 to 72 and 83-85 of the Assessee's paper book, respectively.
10. From a perusal of reconciliation of payments made under OTS and the claim of the Assessee that the principal amount waived is not taxable, the position that emerges is as follows:MP No.47/Bang/2022
M/s. I.G. Petrochemicals Limited, Bangalore Page 2 of 24 Sr. No. PARTICULARS AMOUNT AMOUNT A ASSESSMENT YEAR 2005-06 OUTSTANDING AS ON 31.03.2004 1794.08 UTI BANK VIJAYA BANK ' 1667.50 IIBI 805.01 4266.59 Less • PAID UNDER OTS DURING THE YEAR UTI BANK 303.62 VIJAYA BANK 529.58 IIBI 580.01 1413.21 BALANCE WRITE BACK 2853.38 ADD : INCREASE IN LIABILITY DUE TO CURRENT YEAR TRANSACTIONS. 16.61 TOTAL PRINCIPAL WRITE BACK 2869.99 Sr. No. PARTICULARS AMOUNT AMOUNT A ASSESSMENT YEAR 2006-07 OUTSTANDING AS ON 31.03.2005 34670.50 PAID UNDER OTS DURING THE YEAR 2005-06 18447.71 BALANCE PAYMENT UNDER OTS PAID DURING -
NEXT YEAR 1696.94 20144.65
BALANCE WRITE BACK 14525.85
ADD : INCREASE (DECREASE) IN LIABILITY DUE
TO CURRENT YEAR TRANSACTIONS. -3.51
TOTAL PRINCIPAL WRITE BACK 14522.34
PAYMENT DURING 2005-06 UNDER OTS
Rs.in Lacs
Paid by Spinaker Paid Direct Total
Bank of India 2828.76 1466.25 4295.01
Canara Bank 1691.78 1691.78
ICICI/ARCIL 2144.00 60.00 2204.00
United Bank of 1304.91 1304.91
India
Bank of Baroda 2727.54 1073.00 3800.54
Dena Bank 1273.23 81.77 1355.00
LIC 616.47 616.47
SASF 2910.00 190.00 3100.00
MP No.47/Bang/2022
M/s. I.G. Petrochemicals Limited, Bangalore
Page 3 of 24
Standard 80.00 80.00
Chartered Bank
Total 12500.00 5947.71
18447.71
PAYMENT DURING 2006-07 UNDER OTS
BANK OF INDIA 54.94
ICICI/ARCIL 1056.00
UNITED BANK OF INDIA 200.00
BANK OF BARODA 200.00
DENA BANK 136.00
SASF 50.00
1696.94
11. The nature of loans waived is given in page 109, 110, 111 & 112 of the Paper book and the same are as follows:
SR NO PARTICULARS 31.03.1997 31.03.1998 31.03.1999 31.03.2000 31.03.2001 31.03.2002 31.03.2003 31.03.2004 31.03.2005 2005-05 A TERM LOAN ....
1 ICICI 5016.11 5191.65 5424.58 5255.80 5290.93 5290.93 5290.93 5290.93 3552.50 2 IDBI . 2727.72 2891.32 3099.99 3163.21 3243.87 3382.92 3382.92 3382.92 3382.92 i 3 LIC 680.00 616.46 616.46 616.46 615.46 615.46 515.46 616.46 616.46 4 1181 950.00 950.00 950.00 950.00 950.00 950.00 805.01 0 5 DEBENTURES - UBI 750.00 750.00 750.00 750.00 750.00 750.00 750.00 750.00 636.50 TOTAL ( A ) • 9173.83 10399.43 10841.03 10735 47 10851 26 10990 31 10990 31 10845.32 .8188 38 0 00 B BANK BORROWING 1 175.86 UTI BANK LTD 79.77 1258.52 2121.38 1656.66 2772.88 2390.46 1794.08 2 VIJAYA BANK - 108.48 2369.86 2250.30 2019.85 4086.48 2387.91 1667.50 3 BANK OF INDIA 416.20 1227.65 5968.24 6502.13 6-468.12 7039.69 7040.15 7040.15 7134.69 4 CANARA BANK 115.94 273.32 3183.88 3443.81 3937.34 3937.50 3937.59 3937.59 3651 81 5 ICICI BNAK LTD. 260.67 603.74 2220.46 2355.31 2407.57 2891.40 2640.17 1841.95 2185.12 UNITED BANK OF INDIA 150.00 150.00 3080.16 2016.14 2703.29 3257.79 3220.36 3220.36 2733.65 7 BANK OF BARODA 46.4.14 541.87 5414.97 5730.88 5910.18 10766.05 6744.73 6298.00 6304.96 8 DENA BANK 200.00 206.68 3044.60 2819.76 2766.14 4848.14 2872.94 2872.94 2877.47 9 STANDARD CHARTERED BANK 100.00 99.96 1743.33 1945 61 2075.63 2455.44 2146.40 1819.91 4584.42 TOTAL ( B) 1882.81 3291.67 28284.02 29185.32 29944.78 42058.47 33880.71 30492.48 26482.12 0.00 GRAND TOTAL ( 4+8) 11056.64 13691 1 39125.05 39920.79 40796.04 53048.78 44871.02 41337.8 34670.50 0 MP No.47/Bang/2022 M/s. I.G. Petrochemicals Limited, Bangalore Page 4 of 24 MP No.47/Bang/2022 M/s. I.G. Petrochemicals Limited, Bangalore Page 5 of 24 MP No.47/Bang/2022 M/s. I.G. Petrochemicals Limited, Bangalore Page 6 of 24
12. It is clear from the aforesaid statement that the nature of the loan in AY 2005- 06 & 2006-07 remains the same. The claim of the Assessee in this MP is that the tribunal erroneously proceeded in its order for Assessment Year 2006-07 on the footing that its earlier order for AY 2005-06 related only to waiver of term loans not to waiver of working capital loan. This is not correct as seen from para 20 of the order of the Tribunal for Assessment Year 2005-06 wherein the Tribunal has referred to term loan and interest thereon. There is no reference to waiver of working loan in AY 2005-06. The fact is that the there was waiver of both term loan and working capital loan in AY 2006-07. On the question whether waiver of working capital loan can be taxed u/s.41(1)/28(iv) of the Act or not, the law is laid down by MP No.47/Bang/2022 M/s. I.G. Petrochemicals Limited, Bangalore Page 7 of 24 the Hon'ble Bombay High Court in the case of Solid Containers Ltd. v. DCIT (2009) 308 ITR 417 (Bom) on the basis of which the AO brought to tax the amount waived as income of the Assessee in both AY 2005-06 & 2007. When the position of taxability came up before the Bombay High Court in the case of Mahindra & Mahindra Ltd. v. CIT (2003), 261 ITR 501 (Bom) (HC), where the waiver was of loan availed for the purpose of acquiring capital equipments, it was held that when no deduction was claimed by the assessee in earlier years and the utilisation of loan went into acquiring capital assets, s.28(iv) or s.41(1) cannot be made applicable.
However in the case of Solid Containers Ltd v. DCIT (2009) 308 ITR 417 (Bom) (HC), the Hon'ble court deviated from the earlier decision and held that application of the funds would decide the nature of treatment to be given to the remission of liabilities. The court held that if the loans were utilised for trading purposes, remission of such liabilities would be in the nature of income, whereas if the loans were utilised for capital purposes, remission of loan could not be treated as income. Court further observed that a receipt, which is capital in nature in the earlier year, by efflux of time, can change its character as revenue receipt. The Supreme Court in the case of Mahindra and Mahindra Ltd. [2018] 404 ITR 1 (SC) upheld the Bombay High Court view but the same was again in the context of waiver of loan for acquisition of capital assets and it held that the provisions of section 28(iv) and 41(1) are not applicable in the event of waiver of loan. In the case of CIT v. T.V. Sundaram Iyengar & Sons Ltd. [1996] 222 ITR 344 (SC), the court observed that the moneys had arisen out of ordinary trading transactions. The assessee had received certain deposits from customers in the course of carrying on his business, which were originally treated as capital receipts. Since these credit balances, standing in favour of assessee's customers, were not claimed by the customers, the assessee transferred such amounts to its profit and loss account. The assessee did not include such amounts in its total income. The Court held that although the amounts received originally were not of income nature, the amounts remained with the assessee for a long period unclaimed by the trade parties. By lapse of time, the claim of the deposit became time barred and the amount attained a totally different quality. It became a definite trade surplus. Although it was treated as deposit and was of capital nature at the point of time it was received, by efflux of time the money has become the assessee's own money. What remains after adjustment of the deposits has not been claimed by the customers. The claims of the customers have become barred by limitation. Here we see the concept of 'changing of character of receipt by efflux of time' and the action of the assessee of crediting it to profit & loss account which shows that the assessee treats it as revenue, as in the present case, where receipts have been shown as extraordinary items in the profit and loss account (Note 14 of notes to Profit & Loss Account). It is based on these decisions that the AO made the impugned additions in AY 2005-06 & 2006-07.
13. From the discussion in paragraph-12 above, it is clear that waiver of working capital loan was taxable. Therefore, the view taken by the Tribunal in it's order dated 21.1.2022 cannot be said to be an unsustainable view. The tribunal has given reason as to why waiver of principal portion of working capital loan is taxable and has taken a conscious decision after considering the Tribunal's order dated 27.12.2021 for AY 2005-06. It is no doubt true that to the extent the waiver of loan was towards term loan, it was not taxable as was held by the Tribunal in it's earlier order for AY 2005-06 dated 27.12.2021. Therefore, to the extent that the Tribunal MP No.47/Bang/2022 M/s. I.G. Petrochemicals Limited, Bangalore Page 8 of 24 order dated 21.1.2022 holding that the waiver of principal of loan availed for capital account purpose is not taxable.
14. The question that would arise for consideration is whether any mistake can be rectified in exercise of powers u/s.254(2) of the Act. The Hon'ble Supreme Court in Commissioner of Income Tax vs. Reliance Telecom Limited, Civil Appeal No.7110 of 2021 dated 03rd December, 2021 reported as (2021) 323 CTR (SC) 873 on the scope of powers u/s.254(2) of the Act held as under:-
"4. In the present case, a detailed order was passed by the ITAT when it passed an order on 6- 9-2013, by which the ITAT held in favour of the Revenue. Therefore, the said order could not have been recalled by the Appellate Tribunal in exercise of powers under section 254(2) of the Act. If the Assessee was of the opinion that the order passed by the ITAT was erroneous, either on facts or in law, in that case, the only remedy available to the Assessee was to prefer the appeal before the High Court, which as such was already filed by the Assessee before the High Court, which the Assessee withdrew after the order passed by the ITAT dated 18-11- 2016 recalling its earlier order dated 6-9-2013. Therefore, as such, the order passed by the ITAT recalling its earlier order dated 6-9-2013 which has been passed in exercise of powers under section 254(2) of the Act is beyond the scope and ambit of the powers of the Appellate Tribunal conferred under section 254 (2) of the Act. Therefore, the order passed by the ITAT dated 18- 11-2016 recalling its earlier order dated 6-9-2013 is unsustainable, which ought to have been set aside by the High Court.
5. From the impugned judgment and order passed by the High Court, it appears that the High Court has dismissed the writ petitions by observing that (i) the Revenue itself had in detail gone into merits of the case before the ITAT and the parties filed detailed submissions based on which the ITAT passed its order recalling its earlier order; (ii) the Revenue had not contended that the ITAT had become functus officio after delivering its original order and that if it had to relook/revisit the order, it must be for limited purpose as permitted by Section 254(2) of the Act; and (iii) that the merits might have been decided erroneously but ITAT had the jurisdiction and within its powers it may pass an erroneous order and that such objections had not been raised before ITAT.
6. None of the aforesaid grounds are tenable in law. Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors Section 254(2) of the Act. As observed hereinabove, the powers under section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that."
15. The Hon'ble Supreme Court in the case of CIT Vs. Saurashtra Kutch Stock Exchange case 219 CTR (SC) 90 has held that non-consideration of the decision of MP No.47/Bang/2022 M/s. I.G. Petrochemicals Limited, Bangalore Page 9 of 24 the jurisdictional high court/Supreme Court constitutes mistake apparent from record and is rectifiable within the meaning of section 254(2) of the Act.
16. In Honda Siel Power Products Ltd. v. CIT 295 ITR 466, the Hon'ble Supreme Court explained the scope of rectification powers u/s/254(2) of the Act, as follows:
"Scope of the Power of Rectification
12. As stated above, in this case we are concerned with the application under section 254(2) of the 1961 Act. As stated above, the expression "rectification of mistake from the record" occurs in section 154. It also finds place in section 254(2). The purpose behind enactment of section 254(2) is based on the fundamental principle that no party appearing before the Tribunal, be it an assessee or the Department, should suffer on account of any mistake committed by the Tribunal. This fundamental principle has nothing to do with the inherent powers of the Tribunal. In the present case, the Tribunal in its Order dated 10.9.2003 allowing the Rectification Application has given a finding that Samtel Color Ltd. (supra) was cited before it by the assessee but through oversight it had missed out the said judgment while dismissing the appeal filed by the assessee on the question of admissibility/allowability of the claim of the assessee for enhanced depreciation under section 43A. One of the important reasons for giving the power of rectification to the Tribunal is to see that no prejudice is caused to either of the parties appearing before it by its decision based on a mistake apparent from the record.
13. "Rule of precedent" is an important aspect of legal certainty in rule of law. That principle is not obliterated by section 254(2) of the Income-tax Act, 1961. When prejudice results from an order attributable to the Tribunal's mistake, error or omission, then it is the duty of the Tribunal to set it right. Atonement to the wronged party by the court or Tribunal for the wrong committed by it has nothing to do with the concept of inherent power to review. In the present case, the Tribunal was justified in exercising its powers under section 254(2) when it was pointed out to the Tribunal that the judgment of the coordinate bench was placed before the Tribunal when the original order came to be passed but it had committed a mistake in not considering the material which was already on record. The Tribunal has acknowledged its mistake, it has accordingly rectified its order. In our view, the High Court was not justified in interfering with the said order. We are not going by the doctrine or concept of inherent power. We are simply proceeding on the basis that if prejudice had resulted to the party, which prejudice is attributable to the Tribunal's mistake, error or omission and which error is a manifest error then the Tribunal would be justified in rectifying its mistake, which had been done in the present case."
17. Now the question is how to reconcile the above conflicting rulings. It can be said that in the case of Reliance Telecom (supra), the Hon'ble Supreme Court based its conclusion by holding that a detailed order was passed and issue decided and MP No.47/Bang/2022 M/s. I.G. Petrochemicals Limited, Bangalore Page 10 of 24 such order cannot be recalled in exercise of powers of rectification u/s.254(2) of the Act. By doing so, it has not diluted the ration laid down in the case of Saurashtra Stock Exchange (supra) or Honda Siel (supra) and the power to rectify orders which do not follow binding decision of Supreme Court or High Court or earlier order of Tribunal in Assessee's own case.
18. The mistake apparent on the record of the tribunal is in not distinguishing the nature of loan waived in AY 2005-06 from the one waived in AY 2006-07, which mistake is apparent from the details of the loan waived, which are given in page 107 & 108 & 109, 110 and 111 of the Assessee's paper book.
19. In the given facts and circumstances, we are of the view that there is a mistake apparent on the face of record which requires to be rectified. The same is rectified by deleting the existing paragraph 6, 7 and 8 of the order dated 21.1.2022 and substituting the same with the following paragraph 6, 7 and 8 viz., "6. In AY 2005-06 the waiver of principal of loan availed was for capital account purposes as well as for working capital purposes. The Tribunal in its order in Assessment Year 2005-06 has in para - 20 held that waiver of principal of term loan is not taxable. The Tribunal has not mentioned anywhere in its order regarding waiver of principal of working capital loan and interest thereon. The Tribunal has therefore proceeded on the basis that the question in Assessment Year 2005-06 was only with regard to the waiver of term loan and interest thereon. However, the law with regard to taxability of waiver of principal portion of loan availed for working capital purpose and interest thereon was not noticed. On the question whether waiver of working capital loan can be taxed u/s.41(1)/28(iv) of the Act or not, the law laid down in the case of Solid Containers Ltd v. DCIT (2009) 308 ITR 417 (Bom) was that waiver of principal portion of working capital is taxable. When the position of taxability came up before the Bombay High Court in the case of Mahindra & Mahindra Ltd. v. CIT (2003), 261 ITR 501 (Bom) (HC), where the waiver was of loan availed for the purpose of acquiring capital equipments, it was held that when no deduction was claimed by the assessee in earlier years and the utilisation of loan went into acquiring capital assets, s.28(iv) or s.41(1) cannot be made applicable. However in the case of Solid Containers Ltd v. DCIT (2009) 308 ITR 417 (Bom) (HC), the Hon'ble court deviated from the earlier decision and held that application of the funds would decide the nature of treatment to be given to the remission of liabilities. The court held that if the loans were utilised for trading purposes, remission of such liabilities would be in the nature of income, whereas if the loans were utilised for capital purposes, remission of loan could not be treated as income. Court further observed that a receipt, which is capital in nature in the earlier year, by efflux of time, can change its character as revenue receipt. The Supreme Court in the case of Mahindra and Mahindra Ltd. [2018] 404 ITR 1 (SC) upheld the Bombay High Court view but the same was again in the context of waiver of loan for acquisition of capital assets and it held that the provisions of section 28(iv) and 41(1) are not applicable in the event of waiver of loan. In the case of CIT v. T.V. Sundaram Iyengar & Sons Ltd. [1996] 222 ITR 344 (SC), the court observed MP No.47/Bang/2022 M/s. I.G. Petrochemicals Limited, Bangalore Page 11 of 24 that the moneys had arisen out of ordinary trading transactions. The assessee had received certain deposits from customers in the course of carrying on his business, which were originally treated as capital receipts. Since these credit balances, standing in favour of assessee's customers, were not claimed by the customers, the assessee transferred such amounts to its profit and loss account. The assessee did not include such amounts in its total income. The Court held that although the amounts received originally were not of income nature, the amounts remained with the assessee for a long period unclaimed by the trade parties. By lapse of time, the claim of the deposit became time barred and the amount attained a totally different quality. It became a definite trade surplus. Although it was treated as deposit and was of capital nature at the point of time it was received, by efflux of time the money has become the assessee's own money. What remains after adjustment of the deposits has not been claimed by the customers. The claims of the customers have become barred by limitation. Here we see the concept of 'changing of character of receipt by efflux of time' and the action of the assessee of crediting it to profit & loss account which shows that the assessee treats it as revenue, as in the present case, where receipts have been shown as extraordinary items in the profit and loss account (Note 14 of notes to Profit & Loss Account). We therefore hold that waiver of principal portion of loan to the extent the loan relates to working capital/trading purposes is taxable as held in the case of Solid Containers Ltd v. DCIT (2009) 308 ITR 417 (Bom). To the extent the waiver of the principal portion of loan availed for capital account purposes, the same is not taxable as held in the case of Mahindra & Mahindra Ltd. v. CIT (2003), 261 ITR 501 (Bom).
7. Similarly, interest waiver, if any and if it is allowed as a deduction in any earlier assessment years, then only the waiver of such interest on term loan as well as on working capital loan could be treated as revenue receipt liable to tax u/s 41(1) of the Act. Since this exercise has not been carried out either by the AO/CIT(A), we deem it fit and proper to remand the issue to the AO for consideration afresh to examine the purpose of the loan availed by the Assessee and in the light of the observations as made above, after affording Assessee opportunity of being heard. In this regard, we also find from page 109 of the Assessee's paper book that the loans on which principal was waived included both term loan as well as other loan. From copy of the loan waiver letters of the Banks, copies of which are at pages 110 to 130, it is not clear as to what was the purpose for which the loans were availed by the Assessee. Hence, it is not possible for us to decide the issue and the AO has to necessarily carry out the exercise of finding out the purpose of the loan.
8. In the result, the appeal by the Assessee is treated as allowed for statistical purpose."
20. In the result, the MP filed by the assessee is partly allowed.
MP No.47/Bang/2022M/s. I.G. Petrochemicals Limited, Bangalore Page 12 of 24
2. Against the above order of the M.A., the assessee filed writ petition No.20579/2022 (T-IT) dated 23.9.2023 before Hon'ble High Court of Karnataka, wherein the following question of law has been framed:
A. Whether as against the order passed in Miscellaneous Petition under section 254(2) of I.T. Act in light of the remedy of appeal being available under section 260A of I.T. Act, the Writ Petition could be entertained?
B. Whether the law laid down in Mahindra and Mahindra (supra) if taken note of, would result in benefit in the form of waiver of loan being construed as monetary benefit and not covered by section 28(iv) of the I.T. Act?
C. What order?
2.1 The Hon'ble High Court Single Judge disposed of this writ petition vide order dated 23.9.2023 by observing as under:-
11. After hearing both sides, the following points would arise for consideration:-
A. Whether as against the order passed in Miscellaneous Petition under section 254(2) of I.T. Act in light of the remedy of appeal being available under section 260A of I.T. Act, the Writ Petition could be entertained?
B. Whether the law laid down in Mahindra and Mahindra (supra) if taken note of, would result in benefit in the form of waiver of loan being construed as monetary benefit and not covered by section 28(iv) of the I.T. Act?
C. What order?
(II) ANALYSIS:-
(A) Whether as against the order passed in Miscellaneous Petition under Section 254(2) of I.T. Act in light of the remedy of appeal being available under Section 260A of I.T. Act, the Writ Petition could be entertained?
12. Under section 260A of the I.T. Act, an appeal lies to the High Court from "every order passed in appeal by the Appellate Tribunal", if the High Court is satisfied that the case involves a substantial question of law. The Revenue has taken the stand that the order passed in the Miscellaneous Petition filed seeking rectification, would be an order subject to appeal under Section 260A of the I.T. Act. This position is not seriously disputed by the petitioner, however, it is the contention that mere existence MP No.47/Bang/2022 M/s. I.G. Petrochemicals Limited, Bangalore Page 13 of 24 of an alternative remedy would not ipso facto amount to a bar on entertaining a Writ Petition.
13. In the present factual matrix, it needs to be noticed that the petitioner contends that the rectification application filed under Section 254(2) of the I.T. Act ought to have been allowed in its entirety in light of the law laid down by the Apex Court in Mahindra and Mahindra (supra), wherein the Apex Court has held that waiver of loan constituted a benefit in the shape of money which was outside the purview of Section 28(iv) of I.T. Act. Accordingly, it is contended that the Tribunal and subordinate Authorities being bound by such law laid down, its application did not require any detailed discussion on facts. It is contended that the order in challenge before the Tribunal ought to have been rectified after taking note of the legal position.
14. Though learned counsel Sri E.I. Sanmathi has relied on the Division Bench's judgment of this Court in L. Sohanraj and others v. Deputy Commissioner of Income Tax and Another 3 [L. Sohanjraj], affirming the order of learned Single Judge4 and the judgment of this Court passed in Deputy Commissioner of Income Tax v. H.V. Shantaram5 [H.V. Shantaram], however, a close reading of the said judgments and orders do not support the proposition of the Revenue. Before the learned Single Judge in L. Sohanraj and others v. Deputy Commissioner of Income Tax and another6, though the conclusion was that Writ ought not to be entertained as the petitioners had an alternative, effective and efficacious remedy provided under the statue, however, such conclusion cannot be elevated to a rule prescribing non- entertaining of Writ Petitions where alternative remedy is available. In the order rendered by the learned Single Judge it is observed as follows:-
"10. The bar relating to alternative remedy has been a rule of self-imposed limitation rather than a rule of law. The existence of alternative remedy had always been regarded as one of the factors which this court is required to bear in mind while exercising its discretionary jurisdiction. Ordinarily, the court will not entertain a petition for a writ under article 226 of the Constitution, where the petitioner has an alternative remedy, which without being unduly onerous provides an equally efficacious remedy.
The law on this point is now well settled..." The learned Single Judge further refers to the observation made by the Apex Court in Thansingh Nathmal v. Superintendent of Taxes7, [Thansingh Nathmal] at para-7 which reads as follows:-
"7. Against the order of the Commissioner an order for reference could have been claimed if the appellants satisfied the Commissioner or the High Court that a question of law arose out of the order. But the procedure provided by the Act to invoke the jurisdiction of the High Court [1964] 15 STC 468, 474 : AIR 1964 SC 1419 was by-passed; the appellants moved the High Court challenging the competence of the Provincial Legislature to extend the concept of sale, and invoked the extraordinary jurisdiction of the High Court under article 226 and sought to reopen the decision of the taxing authorities on question of fact. The jurisdiction of the High Court under article 226 of the Constitution is couched in wide terms and MP No.47/Bang/2022 M/s. I.G. Petrochemicals Limited, Bangalore Page 14 of 24 the exercise thereof is not subject to any restrictions except the territorial restrictions which are expressly provided in the articles. But the exercise of the jurisdiction is discretionary; it is not exercised merely because it is lawful to do so. The very amplitude of the jurisdiction demands that it will ordinarily be exercised subject to certain self-imposed limitations. Resort to that jurisdiction is not intended as an alternative remedy for relief which may be obtained in a suit or other mode prescribed by statute. Ordinarily, the court will not entertain a petition for a writ under article 226, where the petitioner has an alternative remedy, which without being unduly onerous, provides an equally efficacious remedy. Again the High Court does not generally, enter upon a determination of questions which demand an elaborate examination of evidence to establish the right to enforce which the writ is claimed. The High Court does not therefore act as a court of appeal against the decision of a court or Tribunal, to correct errors of fact, and does not by assuming jurisdiction under article 226 trench upon an alternative remedy provided by statute for obtaining relief. Where it is open to the aggrieved petitioner to move another Tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Court normally will not permit by entertaining a petition under article 226 of the Constitution the machinery created under the statute to be by-passed, and will leave the party applying to it to seek resort to the machinery so set up."
15. The conclusion of learned Single Judge8 declining the Writ Petition cannot be read out of context including reference to the order of the Apex Court in Thansingh Nathmal (supra) which speaks for itself L. Sohanraj & Ors. v. Deputy Commissioner of Income Tax and Another (supra) and lays down the proposition that the exercise of jurisdiction of the High Court under Article 226 of the Constitution of India is couched in wide terms and that exercise of jurisdiction is discretionary and subject to self imposed limitations and that where there is redress provided for under a statute, "the High Court normally will not permit by entertaining a petition under Article 226 of the Constitution," accordingly, the order of the learned Single Judge cannot be construed as laying down an inflexible rule of non-entertaining of Writ Petition when alternative remedy is available by relying on the conclusion of that case. The appeal against the order of learned Single Judge9 came to be rejected by the Division Bench in L. Sohanraj (supra), which merely affirmed the order of learned Single Judge without adding anything further than what was laid down by the learned Single Judge.
16. In H.V. Shantaram (supra), the Court had framed a question - "(ii) Whether this is a fit case for this Court to examine the correctness of the impugned order in exercise of the power conferred on it under Articles 226 and 227 of the Constitution of India, even if the right of appeal is available?
While answering the said question, the observations made by the learned Single Judge are as under:-
"... Now the next question is, if the petitioner has a right of appeal provided against the impugned order before this Court, whether this Court in the light of the MP No.47/Bang/2022 M/s. I.G. Petrochemicals Limited, Bangalore Page 15 of 24 contentions advanced by the learned Counsel appearing for the petitioner that the impugned order is one without jurisdiction, should proceed to examine the correctness of the impugned order and if it is held that the impugned order is one made without jurisdiction, whether this Court should interfere against the impugned order? It is no doubt true that when an order is made in disregard of principles of natural justice or the order made is one without jurisdiction, this Court could interfere against the said orders in exercise of its powers under Articles 226 and 227 of the Constitution of India, even if a right of appeal is provided against such orders. But the question is, when a right of appeal is provided before Division Bench of this Court on a substantial question of law where the scope of interference is wider in appeal than the one by this Court in exercise of its writ jurisdiction, whether it is appropriate for this Court to proceed to examine the correctness of such orders? As noticed by me earlier, in my view, when alternative remedy of right of appeal provided is to this Court and that too before a Division Bench of this Court, it will be totally inappropriate for this Court to exercise its extraordinary jurisdiction under Articles 226 and 227 of the Constitution of India. The power of this Court under Articles 226 and 227 of the Constitution of India is exercised to set right the injustice done to a party and when generally no remedy is provided to the party under a statute. The scope of examination by this Court with regard to the grievance made by the parties against the order passed by the subordinate authorities, the Tribunals and Courts in exercise of the power under Articles 226 and 227 of the Constitution of India is much narrower and circumscribed by in-built limitations imposed on it than the right of appeal conferred in a Statute. Therefore, question number 2 is also required to be answered against the petitioner. However, the submission of Sri Acharya that the respondent also would not raise any objection with regard to the maintainability of the appeal under 260A of the Act is placed on record."
Finally, the Court has concluded by rejecting the petition filed under Article 226 and 227 of the Constitution of India while reserving liberty to challenge the impugned order by way of an appeal under Section 260A of the I.T. Act.
The conclusion also cannot be relied upon as laying down the rule of non- maintainability of Writ Petition where an alternative remedy of appeal is provided under a statute. The observations reproduced above would clearly indicate that the entertaining of Writ Petition is a matter of discretion and appropriateness.
17. Accordingly, the judgments of this Court relied upon and referred to above would reiterate that entertaining of a Writ Petition in the presence of a statutory alternative remedy is a matter of appropriateness indicating existence of discretion in the Court while recognizing the exceptions for entertaining such Writ Petitions even where an alternative remedy exists. The conclusions in the above judgments do not lay down any principle of law and are mere decisions in the facts of the case and cannot be read de hors the other observations made in the said order and references to the judgments of Apex Court which would affirm the conclusion arrived at as hereinabove.
MP No.47/Bang/2022M/s. I.G. Petrochemicals Limited, Bangalore Page 16 of 24
18. It is to be noticed that the subsequent judgment of the Apex Court in Magadh Sugar and Energy Ltd v. State of Bihar and Others10(Bench of three Judges), wherein the Apex Court was dealing with the appeal challenging the order of the High Court declining to entertain a Writ Petition on the ground that the dispute was suitable for adjudication under a statutory remedy was disposed off by remitting the matter back to the High Court to entertain the Writ Petition. The relevant observations made are as follows:
"25. While a High Court would normally not exercise its writ jurisdiction under Article 226 of the Constitution if an effective and efficacious alternate remedy is available, the existence of an alternate remedy does not by itself bar the High Court from exercising its jurisdiction in certain contingencies. This principle has been crystallized by this Court in Whirlpool Corporation v. Registrar of Trademarks, Mumbai and Harbanslal Sahni v. Indian Oil Corporation Ltd. Recently, in Radha Krishan Industries v. State of Himachal Pradesh a two judge Bench of this Court of which one of us was a part of (Justice DY Chandrachud) has summarized the principles governing the exercise 2021 SCC Online SC 801 of writ jurisdiction by the High Court in the presence of an alternate remedy. This Court has observed:
"28. The principles of law which emerge are that:
(i) The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well;
(ii) The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person;
(iii) Exceptions to the rule of alternate remedy arise where (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged;
(iv) An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law;
(v) When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion; and
(vi) In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with.
(emphasis supplied)"
MP No.47/Bang/2022M/s. I.G. Petrochemicals Limited, Bangalore Page 17 of 24
27. The above principle was reiterated by a three-judge Bench of this Court in Executive Engineer v. Seetaram Rice Mill. In that case, a show cause notice/provisional assessment order was issued to the assessee on the ground of an unauthorized use of electricity under Section 126(1) of the Electricity Act 2003 and a demand for payment of electricity charges was raised. The assessee contended that Section 126 was not applicable to it and challenged the jurisdiction of the taxing authorities to issue such a notice, before the High Court in its writ jurisdiction. The High Court entertained the writ petition. When the judgment of the High Court was appealed before this Court, it held that the High Court did not commit any error in exercising its jurisdiction in respect of the challenge raised on the jurisdiction of the revenue authorities. This Court made the following observations:
"81. Should the courts determine on merits of the case or should they preferably answer the preliminary issue or jurisdictional issue arising in the facts of the case and remit the matter for consideration on merits by the competent authority? Again, it is somewhat difficult to state with absolute clarity any principle governing such exercise of jurisdiction. It always will depend upon the facts of a given case. We are of the considered view that interest of administration of justice shall be better subserved if the cases of the present kind are heard by the courts only where they involve primary questions of jurisdiction or the matters which go to the very root of jurisdiction and where the authorities have acted beyond the provisions of the Act.
82. It is argued and to some extent correctly that the High Court should not decline to exercise its jurisdiction merely for the reason that there is a statutory alternative remedy available even when the case falls in the above stated class of cases. It is a settled principle that the courts/tribunal will not exercise jurisdiction in futility. The law will not itself attempt to do an act which would be vain, lex nil frustra facit, nor to enforce one which would be frivolous-lex neminem cogit ad vana seu inutilia-the law will not force anyone to do a thing vain and fruitless. In other words, if exercise of jurisdiction by the tribunal ex facie appears to be an exercise of jurisdiction in futility for any of the stated reasons, then it will be permissible for the High Court to interfere in exercise of its jurisdiction. This issue is no longer res integra and has been settled by a catena of judgments of this Court, which we find entirely unnecessary to refer to in detail..."
(emphasis supplied)"
19. Finally, the judgment of Apex Court in M/s Godrej Sara Lee Ltd. v. The Excise and Taxation officer11, apart from reiterating the exceptions for entertaining Writ Petitions despite availability of alterative remedy, has observed as follows:-
"4. ...In a long line of decisions, this Court has made it clear that availability of an alternative remedy does not operate as an absolute bar to the "maintainability" of a writ petition and that the rule, which requires a party to pursue the alternative remedy provided by a statute, is a rule of policy, convenience and discretion rather than a rule of law. Though elementary, it needs to be restated that "entertainability"
and "maintainability" of a writ petition are distinct concepts. The fine but real MP No.47/Bang/2022 M/s. I.G. Petrochemicals Limited, Bangalore Page 18 of 24 distinction between the two ought not to be lost sight of. The objection as to "maintainability" goes to the root of the matter and if such objection were found to be of substance, the courts would be rendered incapable of even receiving the lis for adjudication. On the other hand, the question of Civil Appeal No.5393/2010 dated 01.02.2023 "entertainability" is entirely within the realm of discretion of the high courts, writ remedy being discretionary. A writ petition despite being maintainable may not be entertained by a high court for very many reasons or relief could even be refused to the petitioner, despite setting up a sound legal point, if grant of the claimed relief would not further public interest..."
"8. ...In the latter decision, this Court found the issue raised by the appellant to be pristinely legal requiring determination by the high court without putting the appellant through the mill of statutory appeals in the hierarchy. What follows from the said decisions is that where the controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the high court instead of dismissing the writ petition on the ground of an alternative remedy being available."
20. A perusal of the above observations would indicate the following:-
(a) Rule of exhaustion of statutory remedy is a rule of policy, convenience and discretion 12.
(b) Maintainability relates to an objection which if upheld would operate as a bar for taking up the writ petition and result in rendering incapable adjudication of the lis while the question of entertainability is entirely within the realm of discretion of the High Court Writ remedy being discretionary13.
(c) "In other words, if exercise of jurisdiction by the Tribunal ex-facie appears to be an exercise of jurisdiction in futility for any of the stated reasons, then it will be permissible for the High Court to interfere in exercise of its jurisdiction14"
Radha Krishan Industries v. State of Himachal Pradesh - (2021) SCC OnLine SC 334 - "28(v) When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion;"
M/s Godrej Sara Lee (supra) - para - 4 Executive Engineer v. Seetaram Rice Mill - para - 82
21. Accordingly, where the petitioner contends that the legal question raised is covered by the judgment of Apex Court in Mahindra and Mahindra (supra) which lays down a pure principle in law and does not require detailed investigation into the facts, such assertion if accepted, would lead to the allowing of Miscellaneous MP No.47/Bang/2022 M/s. I.G. Petrochemicals Limited, Bangalore Page 19 of 24 Application for rectification in its entirety and taking note of the principle noticed at point (c) above, no purpose would be served in relegating the parties to avail the statutory remedy. That apart, as noticed in the principle at points (a) and (b) above, the entertaining of Writ Petition involves discretion of the Court and there being no inflexible rule acting as a bar to entertaining of Writ Petition even where alternative remedy is available.
22. Accordingly, the contention regarding maintainability of the Writ Petition is rejected while clarifying that the judgments of this Court in L. Sohanraj (supra) and H.V. Shantaram (supra) do not create a bar on maintainability of Writ Petition as contended and the later judgments of the Apex Court in Magadh Sugar and Energy Ltd (supra) and M/s.Godrej Sara Lee (supra) further explain and reiterate that existence of an alternative remedy does not raise a bar on maintainability and only call upon the Court to decide on entertainability which involves exercise of judicial discretion.
(B) Whether the law laid down in Mahindra and Mahindra (supra) if taken note of, would result in benefit in the form of waiver of loan being construed as monetary benefit and not covered by Section 28(iv) of the I.T. Act?
23. At the outset, it must be noted that the Revenue is not placing reliance on Section 41(1) of the I.T. Act.
24. Accordingly, what needs to be determined is as to whether the wavier of loan leading to a 'benefit' would fall within the ambit of income in terms of Section 28(iv) of the I.T. Act and hence, chargeable to Income Tax?
The relevant extract of Section 28(iv) reads as follows:-
"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 or profession, ...
(iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession."
25. The admitted facts being that the petitioner Company has received a 'benefit' by waiver of loans, the interest on such waived loans though has been offered to tax, the waived principal amount of loan is not offered to tax. The only contention of the Revenue is that the purpose of loan which has been waived, i.e., whether loan was a term loan or working capital loan would determine, if it would be taxable under Section 28(iv) of the I.T. Act.
26. It is contended that, if the loan was taken for working capital, trading purpose and was waived, the benefit being in the nature of a revenue character would fall within the definition of 'benefit' under Section 28(iv) of the I.T. Act and would be income which was taxable. However, if the loan was taken for a capital purpose and upon waiver of it, the benefit would not constitute 'benefit' for the purposes of Section MP No.47/Bang/2022 M/s. I.G. Petrochemicals Limited, Bangalore Page 20 of 24 28(iv) of the I.T. Act being capital in nature and hence would not constitute income chargeable to tax.
27. Reliance is placed on the judgment of High Court of Mumbai in Solid Containers Ltd., v. Deputy Commissioner of Income Tax and Another 15.
Extending the aforesaid logic, reliance is also placed on the judgment of Apex Court in Commissioner of Income Tax v. T.V. Sundaram Iyengar & Sons Ltd.16 to contend that there could be 'changing character of receipt by efflux of time'. It is submitted that a receipt which is capital in nature in earlier year can change its character as revenue receipt with efflux in time which needs to be kept in mind.
28. The assessee on the other hand has relied on the judgment in Mahindra and Mahindra (supra) (2009) 308 ITR 0417 - High Court of Bombay has held that any amount received as loan by the assessee for trading activity and retained in business upon waiver is taxable under Section 28(iv) of the IT Act. (1996) 222 ITR 0344 where the Apex Court had declared that the benefit to be taxable for the purpose of Section 28(iv) of the I.T. Act, should be a benefit/ perquisite other than in the shape of money. The Apex Court held that the benefit upon waiver of loan was in the nature of cash receipt and accordingly, the benefit not being "other than in the shape of money" would fall outside the ambit of Section 28(iv) of I.T. Act and hence, would not constitute income that could be taxable.
29. It must be noted that the Apex Court in Mahindra and Mahindra (supra) was dealing with the waiver of loan and the relevant reasoning as regards Section 28(iv) of the I.T. Act is found in para Nos.13 to 16, which are as follows:-
"13. The term "loan" generally refers to borrowing something, especially a sum of cash that is to be paid back along with the interest decided mutually by the parties. In other terms, the debtor is under a liability to pay back the principal amount along with the agreed rate of interest within a stipulated time.
14. It is a well-settled principle that creditor or his successor may exercise their "right of waiver" unilaterally to absolve the debtor from his liability to repay. After such exercise, the debtor is deemed to be absolved from the liability of repayment of loan subject to the conditions of waiver. The waiver may be a partly waiver i.e. 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 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.
15. 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 hereinbelow:MP No.47/Bang/2022
M/s. I.G. Petrochemicals Limited, Bangalore Page 21 of 24 "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 or profession"--
(iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession;"
16. 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 which 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."
30. The clinching factor as per the Apex Court in Mahindra and Mahindra (supra) to bring the benefit/perquisite within the term 'income' under Section 28(iv) of the I.T. Act was that the 'benefit/perquisite' should be 'other than in the shape of money', while holding that the benefit upon loan waiver was in the form of a cash receipt and did not satisfy the test to make it taxable within the terms of section 28(iv). Clearly, the purpose of loan was neither dealt with nor would be a relevant determinative factor. The only test is that the 'benefit' or 'perquisite' should be other than 'in the shape of money'.
31. Thus, in the present case, the nature of loan would be of no relevance and accordingly, the exercise of ascertaining the purpose of loan as contended by the Revenue does not arise.
32. The judgment of Apex Court in Mahindra and Mahindra (supra) holds the field. The benefit of waiver of loan in the present case is also not other than 'in the shape of money'. Accordingly, the 'benefit' would fall outside the ambit of Section 28(iv) of I.T. Act.
33. The recent amendment to Section 28 of I.T. Act vide Finance Bill 202317, wherein the legislature has included 'benefit' even in form of 'cash' arising from business or profession as being chargeable to income tax. Such amendment substantiates the interpretation of Finance Bill 2023 - "11. In section 28 of the Income-tax Act, for clause (iv), the following clause shall be substituted with effect from the 1st day of April, 2024, namely:-- "(iv) the value of any benefit or perquisite arising from business or the exercise of a profession, whether-- (a) convertible into money or not; or (b) in cash or in kind or partly in cash and partly in kind;". the Apex Court in Mahindra and Mahindra (supra), wherein it was concluded that the 'benefit' not being "other than in the shape of money" i.e., 'benefit' in form of 'cash' MP No.47/Bang/2022 M/s. I.G. Petrochemicals Limited, Bangalore Page 22 of 24 would fall outside the ambit of Section 28(iv) of the I.T. Act by proposing the present amendment.
(C) What order?
34. In light of the above reasoning, no purpose would be served by referring to the judgments relied upon by the Revenue. Even otherwise, as referred to in para-6 of the written submissions filed by the petitioner dated 04.08.2023, the judgments of High Courts18 relied upon by the Revenue have been dismissed by the Apex Court in Mahindra and Mahindra (supra).
35. Accordingly, the order dated 05.09.2022 at Annexure-'F' passed by the Income Tax Appellate Logitronics (P) Ltd. v. Commissioner of Income Tax and Anr - (2011) 333 ITR 0386; Commissioner of Income Tax v. Ramaniyam Homes P. Ltd - (2016) 95 CCH 0147 ChenHC Tribunal "C" Bench, Bangalore in M.P. No.47/Bang/2022 in ITA No.1317/BANG/2018 for the Assessment Year 2006-2007 is set aside. The Tribunal is directed to reconsider M.P.No.47/Bang/2022 in light of the discussion made hereinabove without re-opening any fresh question for consideration.
Accordingly, the petition is disposed off."
2.2 Later, the department filed writ appeal in No.1373 of 2023 (T- IT) and the Hon'ble High Court vide judgement dated 11.12.2023 has confirmed the order in writ dated 23.9.2023 cited (supra). Hence, this MA once again came for consideration before this Tribunal and finally heard on 3.5.2024.
3. The ld. A.R. submitted that in view of the order of Hon'ble High Court in writ petition and writ appeal, wherein held that purpose or object of the loan was immaterial and that the waiver of the principal amount of the loans whether term loans or working capital loans was a capital receipt, which were not taxable u/s 28(iv) of the Act. Accordingly, order of the Tribunal dated 5.9.2022 was passed by this Tribunal as MA is already quashed and the miscellaneous application filed by the assessee to be decided afresh in the light of the observation of the Hon'ble High Court.
4. The ld. D.R. has not put any objection to the above submission of the ld. A.R. and conceded that all the judgements of Hon'ble High Court to be followed.
MP No.47/Bang/2022M/s. I.G. Petrochemicals Limited, Bangalore Page 23 of 24
5. We have heard the rival submissions and perused the materials available on record. The Hon'ble High Court categorically held that in para 30 as follows:
"30. The clinching factor as per the Apex Court in Mahindra and Mahindra (supra) to bring the benefit/perquisite within the term 'income' under Section 28(iv) of the I.T. Act was that the 'benefit/perquisite' should be 'other than in the shape of money', while holding that the benefit upon loan waiver was in the form of a cash receipt and did not satisfy the test to make it taxable within the terms of section 28(iv). Clearly, the purpose of loan was neither dealt with nor would be a relevant determinative factor. The only test is that the 'benefit' or 'perquisite' should be other than 'in the shape of money'."
5.1 Respectfully following the above order of the Hon'ble High Court, we hold that provisions of section 28(iv) of the Act is not applicable in respect of waiver of loan whether it is term loan or working capital loan. To that extent, order of the Tribunal in ITA No.1317/Bang/2018 dated 21.1.2022 stands modified. MA filed by the assessee is disposed of in terms of directions of the Hon'ble High Court. Accordingly, the order of the Tribunal in MA No.47/Bang/2022 to be read as above.
5.2 Thus, there is no other changes in the order of the Tribunal in ITA No.1317/Bang/2018 dated 21.1.2022. The ld. AO is directed to pass fresh order in the light of our above observations.
Order pronounced in the open court on 30th May, 2024
Sd/- Sd/-
(Beena Pillai) (Chandra Poojari)
Judicial Member Accountant Member
Bangalore,
Dated 30th May, 2024.
VG/SPS
MP No.47/Bang/2022
M/s. I.G. Petrochemicals Limited, Bangalore
Page 24 of 24
Copy to:
1. The Applicant
2. The Respondent
3. The CIT
4. The DR, ITAT, Bangalore.
5 Guard file
By order
Asst. Registrar,
ITAT, Bangalore.