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2021 (8) TMI 135 - KARNATAKA HIGH COURTAddition u/s 41(1) - whether the assessee has obtained a benefit by virtue of remission / cessation, in order to attract applicability of Section 41(1)? - HELD THAT:- In the instant case, from perusal of the Government Order, it is evident that the assessee had paid the loans on behalf of the Government of Karnataka. Therefore, the aforesaid amount was acknowledged as debt by the Government. The Government of Karnataka gave a direction to the assessee to square up the debt in full against payment of ₹ 120 Crores and adjustment of ₹ 240 Crores from Karnataka Power Transmission Corporation Limited. Thus, adjustment of dues and debts between the parties did not give any advantage to the assessee. On the other hand, the assessee on adjustment of the dues sustained a loss to the extent of ₹ 127.66 Crores. The tribunal therefore, held that provisions of Section 41(1) of the Act are not attracted in the case of the assessee. The aforesaid finding of fact is based on meticulous appreciation of material on record and cannot be termed as perverse. It is pertinent to mention here that the aforesaid finding has not been challenged on the ground that it is perverse It is pertinent to note that Supreme Court in MAHINDRA AND MAHINDRA LTD. [2018 (5) TMI 358 - SUPREME COURT] has held that there should be an allowance or deduction claimed by the assessee for any assessment year in respect of loss, expenditure or trading liability incurred by the assessee. Therefore, the aforesaid decision is of no assistance to the revenue. The contention of the revenue that in respect of an amount of ₹ 240 Crores, which was claimed by the assessee as an expenditure in the form of trading liability, provisions of Section 41 of the Act are applicable cannot be accepted. Decided in favour of the assessee.
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