Pune ITAT: Loan Waiving Not Comes Under Business Income, No Tax U/S 28(i)

The Pune bench of Income Tax Appellate Tribunal (ITAT) would rule that the waiver of loan would not be a business income and hence the same does not get taxed under section 28(i) of the Income Tax Act 1961.

Section 28(i) Income Tax Act, of 1961 is concerned with the profit and gains of any business or profession of the taxpayer at any time in the former year.

The taxpayer Runwal Realtors Pvt. Ltd. is a Domestic Company and the case was chosen for the process of scrutiny post furnishing the Income tax return. The assessment order post scrutiny was issued via the assessing officer that ruled that the waiver amount of the loan of Rs 143,71,02,0038 was levied to tax under sections 28(i) and 28(iv) and 41(1) of the Income Tax Act 1961.

Against the order, the taxpayer has filed the petition to the Commissioner of Income Tax Appeal CIT(A). The petition of the taxpayer would get permitted by CIT (A). Post to that the disappointed revenue furnish the petition before ITAT.

The counsel for the IT revenue would be laid on the assessing officer’s order.

Read Also: ITAT: Interest from Loans, Deposits and Advances to Be Considered as Business Income

The taxpayer’s counsel provided that the taxpayer would have issued the FRN. The FRNs would be the debt instruments which has the interest as specified in the subscription agreement. The discount on the FRNs redemption comprises the capital receipt that does not levy tax.

The petition gets dismissed by the Tribunal that consists of S.S.Viswanethra Ravi, (Judicial Member) and Dipak P. Ripote, (Accountant Member) which the revenue filed and ruled that the taxpayer is engaged in the construction business and hence the waiver of the loan amount of Rs 1,43,71,02,003 is not the taxpayers business income. Therefore it does not levy tax under section 28(i) of the Income Tax Act 1961.