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01.03.2011 - Some Useful Updates as on 01.03.2011
Tuesday, March 1, 2011

1.   LOGITRONICS PVT. LTD VERSUS COMMISSIONER OF INCOME TAX & ANR., ITA NO.1623 OF 2010 & COMMISSIONER OF INCOME TAX Vs. JUBILANT SECURITIES PVT. LTD., ITA NO. 503 OF 2010, ORDER PRONOUNCED ON: FEBRUARY 18, 2011, HIGH COURT OF DELHI AT NEW DELHI

(1) Whether the Tribunal was right in law in holding that taxability of waiver of loan would be governed by the purpose for which the loan was taken, inasmuch as, though waiver of loan taken/utilized for acquiring capital asset does not constitute income, however, waiver of loan taken for ITA the purpose of business/trading activity gives rise to income taxable under the Act?  

That in the case where capital assets are acquired by obtaining a loan, and subsequently, the loan amount is waived by the other party, the principal amount of loan waived by the other party cannot be brought to tax under Section 28(iv) of the Act or under Section 41(1) of the Act

Whether learned ITAT erred in deleting the addition of `25 lacs made by the Assessing Officer on account of Unsecured Loan Written Back?

It was also explained by the learned counsel for the assessee, during the arguments, that not only waiver of loans would not constitute income applying the judgment of the Bombay High Court in Mahindra & Mahindra Ltd 261 ITR 501(Bom), The benefit or perquisite must be one arising in the course of business, in order that the same is taxable under Section 28(iv) of the Act. The assessee is a company engaged, inter alia, in the business of finance and making investments in shares. The loan obtained by the respondent-assessee from SHPL was part of the source of funds employed by the assessee in its business. In pursuance of the business of financing, the assessee advances loans at interest. Such loans are advanced out of interest-free own funds available with the assessee in the form of share capital and reserves or out of borrowed funds in the form of loans, etc. The loans borrowed are to augment the funds available with the assessee, to be advanced on interest. Such loans borrowed are a source of funds. It cannot be said that the assessee is in the business of borrowing and advancing loans - it can never be the business of an assessee to borrow money by way of loans. Thus, the money borrowed, it is reiterated, are only a source of funds. Furthermore, as pointed out above, the Tribunal has reached a finding of fact that the amount of loan was not used in financing business. Having regard to these findings of facts constituting the nature of loan, we answer the question in affirmative.

(Please click here for judgment)

  

2.   [Contribution by  CA. Rajat Mohan, and contributor is available on Mobile No.  9910044223 / email-id: rajat.mohan@icai.org ]

Service Tax Amendments Presentation – Series 1

Presentation of amendments by Finance Act, 2011 on Service Tax categories.

(Please click here for presentation)

   

What's New

  • SERVICE TAX Notifications - from Notification No. 1 TO 09  (Click for detail)

  • SERVICE TAX Notifications - from Notification No. 10 TO 18  (Click for detail)

  • D.O.F.No.334/ 3/2011-TRU - BUDGET – Changes in Service Tax  (Click for detail)

  • D.O.F.No.334/ 3/2011-TRU - BUDGET – Changes in Central Excise & Customs  (Click for detail)

  • Notification No. 1/2011-Central Excise - List of items subject to 1 per cent excise duty  (Click for detail)

     

"Reflection Cannot Be Seen In Boiling Water.. The Same Way, Truth Cannot Be Seen In A State Of Anger --- So Analyze Before Finalize" 

    

Thanks for your valuable time 

"Voice of CA"

CA. Sanjay Kumar Agarwal, Founder - Voice of CA
Member  Central Council - ICAI
Former Chairman - NIRC
Mob : 9811080342,
agarwal.s.ca@gmail.com 
   
   
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sidhjasso@yahoo.com 
  
CA. Mukesh K Bansal, Co-Moderator-FEMA
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mukbansal80@gmail.com    

 

 

 

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