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Pune bench in (2023] 106 ITR (Trib) 342 (ITAT[Pune) in a transaction of negotiated settlement of borrowing in the case of real estate business held that the surplus earned on reduction in liability is not chargeable to tax for the following two reasons:

  1. That the assessee here is not in the business of lending and borrowing but only real estate ;
  2. That the income is not received in the regular course of business of real estate.


This decision raises a controversy as it is settled law that waiver of principal amount of loan amounts to cessation of liability other than trading liability qua Mahindra case. It therefore matters little on what type of business the assessee is into. 



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