TMI Blog2011 (12) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... e but on going through the assessment order for the AY 1992-93 U/s. 143(3) dated 23.03.1995 , nowhere in the order it has been stated that interest on bank loan was not allowed as deduction that means it is implied that interest has been allowed as deduction. Thus, assessee fulfills the conditions required for applicability of the provisions of Sec 41(1) of the Act i.e. deduction has been allowed to the tax payer in respect of loss, expenditure, or trading liability incurred by the assessee. 3. In the order of Ld. C.I.T(A) it has been stated appellant company did not derive any benefit of the bank interest waived for in any of the earlier years Viz. AY 1991- 92,1992 93 1993 94 but it has been observed that in the AY 1993-94 if interest on b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther appeal the ld. CIT(A) did not find any merit on the above issue. Accordingly he confirmed the action of AO in dismissing assessee s request. 5.2. On appeal to this Tribunal, assessee has preferred an additional issue which is as under :- Because that in the facts and circumstances of the case and the law the amount of remission of interest by the bank and written back as liability no longer required is not taxable. 5.3. After accepting the additional ground this Tribunal has directed Assessing Officer by observing as under : As the alternative Ground pleaded by the assessee is another angle of the claim of the assessee which required to be examined under the given facts and circumstances of the case accordingly to be decided, this is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading Liability by way of remission or cessation thereof . From the given provision it was cleared that Section 41(1) is applicable if the following conditions are satisfied: - a. In any of the earlier years a deduction was allowed to the taxpayer in respect of loss, expenditure, or trading liability incurred by the assessee. b. during the current previous year, the taxpayer 1. has obtained a refund of such trading liability and 2. has obtained any amount in respect of expenditure or some benefit in respect of such trading liability by way of remission or cessation In the instant case, assessee has fulfilled both the aforesaid conditions:- 1. In all the three years assessee was given deduction in respect of bank interest. 2. Second conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch were relevant to the Asstt. Year 1991-92, 1992-93 1993-94, was claimed as deduction by the appellant during the year on the ground that the remission of interest by the bank and written back as liability no longer required is not taxable u/s 41(1) as the appellant did not derive any benefit of the same in any of the earlier years. Before the ACIT written submissions were made in respect of the issues which are at Paper Book page 1 to page 17. 4.1 It was explained to the ITO with documentary evidence which are at Paper Book pages 18 to 43 that the assessee did not derive any benefit in respect of the Bank interest in-question in any of the earlier years. It was contended before the ACIT that the returns for the Asstt. Year 1991- 1992-93 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 5. (c) As no loss was allowed to be carry forward in any assessment and the returns were non-est, the assessee has not derived any benefit or advantage in respect of the Bank interest for the three years i.e. Asstt. Years 1991-92, 1992-93 1993-94 in any assessment for any assessment year, hence sec. 41(1) is not applicable. Various decisions were relied upon which are at Paper Book page 5. (d) Whether the interest was actually allowed in the relevant assessment years within the meaning of sec. 41(1), onus lies on the Department. The decision of the Hon ble Delhi High Court in Steel and General Mills Co. Ltd. reported in 96 ITR 438 at 442 is relied upon. (e) Interpretation of law should be made reasonable and in consonance with justice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant issue. Therefore, he requested to upheld the action of AO by setting aside the orders of the ld. CIT(A). 7. On the other hand, the ld. Counsel appearing on behalf of assessee has submitted that though it is a fact that assessee has debited the interest in all the preceding three assessment years and the fact is that assessee is running in losses and assessee has not been getting the carry forwarding of the losses since in all the three years assessee has filed the returns belatedly. Therefore he supported the orders of the ld. CIT(A) and requested to upheld the same. 8. After hearing the rival submissions and on careful perusal of materials available on record, we are of the view that when once assessee has debited the interest in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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