453
June 29 To July 5, 2019 u Taxmann’s Corporate Professionals Today u Vol. 45 u 41Taxable income shall be the amount of ad-
vance money forfeited by the assessee during
the course of transfer not resulting in the
ultimate transfer of the asset. This amount
would be taxable as per the Income-tax slab
rates of the Individual.
Budget Expectations
- The Finance Act, 2018 has already in-
troduced provisions for the taxability of
compensation in connection with business
or employment. The definition of income
widened to include compensation upon ter-
mination of employment or modification of
its terms. Consequent upon the inclusion of
payment received by a person in connection
with termination of his employment or the
modification of terms and conditions of his
employment as an income from other sources
under section 56(2)(xi), section 2(24)(xviib)
is inserted with effect from assessment year
2019-20 to provide that such compensation
shall be regarded as income. Also, Section
28 of the Act amended to provide that any
compensation received or receivable, whether
revenue or capital, in connection with the
termination or the modification of the terms
and conditions of any contract relating to its
business shall be taxable as business income.
These receipts are taxable, even though they
are in the nature of Capital Receipt.
The revenue’s contentions are that if there
is a waiver of loan the waived off amount
represented income under section 28(iv) or
alternatively, under section 41. The assessee
claims that the sum waived off could not be
brought to tax as it represented the waiver
of a loan liability which was on the capital
account and, thus, was not in the nature of
income.
However, the waiver of a loan is ultimately
in the nature of benefit which is passed on to
the assessee in the form of waiver. Thus, we
can expect an amendment vide Budget 2019
by the Finance Minister to section 28(iv) or
section 41 to overrule this Supreme Court’s
judgment and tax the waiver of the loan in
the hands of the assessee. It will widen the
tax base of the government.
lllWAIVER OF LOAN - WHETHER TAXABLE?