Section 28, 41 of Income Tax Act, 1961—In the instant case, revenue challenged the order passed by ITAT.

The tribunal has dismissed the appeal of revenue on the issue of deletion of addition of Rs. 8,41,34,321/-, being disallowance of principal amount of loan waived off by the lender on account of one time settlement of loan with Mafatlal Finance Company Ltd., holding that the loan was acquired for acquisition/investment of capital assets as such its waiver cannot be termed as revenue receipt.

Held that—During the assessment proceedings the Assessing Officer had asked the Respondent to explain why the principal amount of Rs. 8,41,34,321/- should not be offered to tax. The Respondent had made submissions that for chargeability under Section 41(1) of the Act, there should have been actual allowance made in the assessment of the assessee in the earlier year. The Commissioner of Income Tax (Appeals) and the Tribunal followed the decisions of this Court in the case of Mahindra and Mahindra Ltd. vs. CIT (2003) 261 ITR 501(Bom) which has now been upheld by the Apex Court in Commissioner v/s. Mahindra & Mahindra Ltd. 2018 (93) Taxmann.com 32. The Court, on similar facts had held that on such waiver of loan taken on capital account, neither the Section 41(1) of the Act nor Section 28(iv) of the Act, are applicable. Thus, the question is no longer res-integra. [THE PR. COMMISSIONER OF INCOME TAX-3, MUMBAI VERSUS M/S. VIBHADEEP INVESTMENT & TRADING LTD.][2019] 17 ITCD Online (30) [BOMBAY HIGH COURT]