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7. RBI with a view to allow Indian companies to buy hack FCCBs. allowed buyback of FCCB both under "automatic route'' and "approval route" [Circular No. 39 (DIR Series) dated 8.12.2008, refer vases 30 to 33 of the paper bookl. Under the automatic route, buyback of FCCB was subject to following conditions:

(i) the buyback value of the FCCB shall be at a minimum discount of 15 % on the book value;
(ii) the funds used for the buyback shall be out of existing foreign currency funds held either in India (including funds held in EEFC account) or abroad and / or out of fresh ECB raised in conformity with the current ECB norms; and
*Unitized balance of Rs. 5,94,84,801/- was utilized towards capital expenditure in the assessment year 2010-11.
Balance sheet of the Appellant for the financial years 2006-07, 2008-09 & 2009-10 (printed) are at vases 54. 55 & 56 of the paper book.

10. It is submitted that there is no dispute as to the facts leading to repurchase of FCCBs or as to the quantum of discount on buyback. The facts have been set out for proper appreciation of issue."

ITA.No.1433/D/2014, CO.No.200/D/2017, CO.No.34/D/2019 in ITA.No.3564/D/2015 & ITA.No.528/D/2016 M/s. K.E.I. Industries Ltd., New Delhi. 5.2. On going through the assessment order, it is discernable that the addition of Rs.26,35,58,122/- was made for the following two reasons :

(i) Buyback of FCCBs was a business transaction having all the elements of business, inasmuch as, the assessee was not duty bound to buy-back FCCBs. The same were bought back on account of profit inherent in buyback of FCCBs at discount. Sensing the profit the assessee made conscious effort to realize the profit.

RBI to buyback FCCBs were met. The fact that the Appellant was allowed to buyback FCCBs itself shows that conditions were complied with.

9. On going through the submissions, I agree with the Appellant that addition of Rs.26,35,58,122/- cannot be sustained under section 41(1) of the IT Act because the amount of FCCBs was not allowed as expenditure or trading liability in the earlier years, therefore, the precondition of section 41(1) was not met. Similarly, the addition cannot be sustained under section 28(iv) of the IT Act. Only in case of an assessee engaged in money lending business, the transaction of raising loan / debenture can be held to be a trading transaction. The Appellant is in manufacturing business, therefore, its submission based on the decision of Madras High Court in Iskraemeo Regent Ltd v. CIT (2011) 331 ITR 317 that a grant of loan cannot be termed as a ITA.No.1433/D/2014, CO.No.200/D/2017, CO.No.34/D/2019 in ITA.No.3564/D/2015 & ITA.No.528/D/2016 M/s. K.E.I. Industries Ltd., New Delhi. trading transaction in the course of business needs to be accepted. As the Appellant is not the business of dealing in FCCBs, therefore, the Appellant is right in submitting that transaction of buyback of FCCBs was not a business transaction. Moreover, section 28(iv) applies to benefit or perquisite other than cash. It being the settled position, I need not discuss the case laws referred on this aspect.