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The Tax Publishers Trigyn Technologies Ltd. v. Asstt. CIT & Vice-Versa [ITA No. 1986/Mum/2012, ITA No. 3012/Mum/2012, dt. 20-4-2016] : 2016 TaxPub(DT) 2202 (Mum-Trib) Expenditure incurred to restructure debt and source strategic investor. Waiver of loan taken to acquire another company, whether capital or revenue in nature. Waiver of loan whether subject to benefit of section 115JB(6) for a SEZ unit. *Facts:* Assessee was a SEZ unit. It had to pay amount to a consultant for sourcing private debt/equity and for restructuring its debt. The assessing officer disallowed the same, confirmed by Commissioner (Appeals). On appeal: Loans taken by the assessee from Global trust bank partly for capital acquisition and working capital was utilized for procuring an offshore entity. The said loan was waived off in part as a settlement. The waiver was treated as capital receipt by assessee, assessing officer subjected it to tax which was sustained by the Commissioner (Appeals). On further appeal: The above waived loan was treated as part of book profits under section 115JB ignoring the fact of assessee being a SEZ unit. On appeal Commissioner (Appeals) upheld the same. Aggrieved assessee went in further appeal. Held in favour of the assessee as under: The amount paid to the consultant for sourcing investor, debt, was partly allowed as 90% as the said amount was for sourcing/restructuring debt. Rest of it pertained for equity sourcing thus disallowable. Loans waived off were partly used for business acquisition to that extent there is no taxability of the same under section 28(iv). The balance pertained to working capital this was taxable under section 28(iv). The scope of section 115JB(6) reads exemption from book profit for income earned from services rendered or from business carried on by the unit. Business carried on is a wider term thus the intent is not to tax income arising from any business of a SEZ unit. Thus assessee was entitled to the benefit of the said section.

The Tax Publishers

Trigyn Technologies Ltd. v. Asstt. CIT & Vice-Versa [ITA No. 1986/Mum/2012, ITA No. 3012/Mum/2012, dt. 20-4-2016] : 2016 TaxPub(DT) 2202 (Mum-Trib)

Expenditure incurred to restructure debt and source strategic investor.

Waiver of loan taken to acquire another company, whether capital or revenue in nature.

Waiver of loan whether subject to benefit of section 115JB(6) for a SEZ unit.

Facts:

Assessee was a SEZ unit. It had to pay amount to a consultant for sourcing private debt/equity and for restructuring its debt. The assessing officer disallowed the same, confirmed by Commissioner (Appeals). On appeal:

Loans taken by the assessee from Global trust bank partly for capital acquisition and working capital was utilized for procuring an offshore entity. The said loan was waived off in part as a settlement. The waiver was treated as capital receipt by assessee, assessing officer subjected it to tax which was sustained by the Commissioner (Appeals). On further appeal:

The above waived loan was treated as part of book profits under section 115JB ignoring the fact of assessee being a SEZ unit. On appeal Commissioner (Appeals) upheld the same. Aggrieved assessee went in further appeal.

Held in favour of the assessee as under:

The amount paid to the consultant for sourcing investor, debt, was partly allowed as 90% as the said amount was for sourcing/restructuring debt. Rest of it pertained for equity sourcing thus disallowable.

Loans waived off were partly used for business acquisition to that extent there is no taxability of the same under section 28(iv). The balance pertained to working capital this was taxable under section 28(iv).

The scope of section 115JB(6) reads exemption from book profit for income earned from services rendered or from business carried on by the unit. Business carried on is a wider term thus the intent is not to tax income arising from any business of a SEZ unit. Thus assessee was entitled to the benefit of the said section.