Revision u/s 263 when Assessee claimed deduction as loan written back under OTS scheme, considering it as “ capital receipt” not liable to tax – the order directing the A.O. to carry through proper enquiry cannot be said to be liable to be set aside

Revision u/s 263 – assessee claimed deduction as loan written back under OTS scheme, considering it as “ capital receipt” not liable to tax – Held that:- We find that the A.O. has not made any enquiry regarding the nature of the loans waived off and the purposes for which they were utilized. The assessee also has at no stage given the correct and complete details and the purposes for which all the loans were utilized.

Case of Mahindra & Mahindra Ltd. (2003 (1) TMI 71 – BOMBAY HIGH COURT ), provided that waiver off loans which were taken and utilized for trading purposes would fall under the realm of taxation as revenue receipt. This view is fully fortified by the decision of the Hon’ble Apex Court in the case of Sundaram Iyergar and Sons Ltd. (1996 (9) TMI 1 – SUPREME COURT) rendered by the Bench comprising three of lordship. Under such facts and circumstances, what the ld. CIT is directing to the A.O. is to pass an order after doing meaningful enquiry and as per law and after giving the assessee reasonable opportunity. We find that in such circumstances, no prejudice whatsoever is caused to the assessee.

In the case of Daniel Merchants Private Limited and others vs. ITO (2017 (12) TMI 409 – CALCUTTA HIGH COURT) wherein the Hon’ble Apex Court has expounded that the order directing the A.O. to carry through proper enquiry cannot be said to be liable to be set aside – Decided against assessee

EXPO GAS CONTAINERS LTD. VERSUS CIT-6, MUMBAI

ITA No. 5210/Mum/2015