S.C : Difference between loan amount, due and payable by assessee was on account of non inclusion of interest amount in loan amount by bank, no concealment was to be alleged against assessee for imposition of penalty under section 271(1)(c)

Supreme Court Of India

Northland Dev. & Hotel Corporation VS. CIT, Agra

Section : 271(1)(C)

S.H. Kapadia, Cj. And Madan B. Lokur, J.

Civil Appeal No. 2134 Of 2007

September 18, 2012

ORDER

Heard learned counsel on both sides.

The civil appeal is allowed with no order as to costs.

ORDER

Heard learned counsel on both sides.

In the present case, the assessee took loan from Citi Bank N.A. to buy a hotel [capital asset]. Default was committed in re-payment of loan. Suit was filed for recovery, which was settled by signing consent decree on 30th April, 1982. The consent decree recites that the borrowers acknowledge their liability to the plaintiff-Bank in the sum of Rs.42,45,477/-, being the outstanding amount in the loan account of the Bank as on 30th April, 1982. However, it appears that, in the Books of Accounts of the assessee, the outstanding amount repayable to the Bank was Rs.52,07,873/- as on 30th April, 1982. Consequently, the Department came to the conclusion that there was waiver by the Bank to the extent of approximately Rupees ten lakhs. This amount was sought to be taxed by the Department. We are not concerned with the taxability of the said sum of Rupees ten lakhs. The Department initiated proceedings under Section 271(1)(c) of the Income Tax Act, 1961, against the assessee. It is true that, in the Books of Accounts of the assessee, the outstanding amount, as on 30th April, 1982, was Rs.52,07,873/-, including interest. However, the decree in favour of the Bank was for Rs.42,45,477/- because that was the amount indicated as the outstanding amount due and payable by the assessee to the Bank in its Books of Account. It appears that the Bank has not calculated the interest over the years possibly for the reason that, in its Accounts, this amount was classified as ‘NPA’.

In the peculiar facts and circumstances of this case, Section 271(1)(c) of the Income Tax Act, 1961, is not applicable.

Accordingly, the civil appeal filed by the assessee is allowed with no order as to costs.

[Citation : 349 ITR 363]

 

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