Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2017 (8) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (8) TMI 620 - HC - Income TaxAddition u/s 41 - conversion of advance into capital - advance was received under FDI - nexus with an allowance or deduction for any previous year as a claim of loss, expenditure, or trading liability - Profits chargeable to tax - Held that:- the nexus has not been established in the present case. Since the tribunal nonetheless decides the issue against the assessee relying on the judgment of the Supreme Court in the Case of T.V.Sundaram Iyengar, [1996 (9) TMI 1 - SUPREME Court], we advert to the same straightaway. In T.V.Sundaram Iyengar [1996 (9) TMI 1 - SUPREME Court] the Bench notes as a fact, that the amounts received had depleted by adjustments made by the assessee from time to time and the resultant balance had been transferred by the assessee to the profit and loss account. This is not the case in the present matter. The amounts in this case, though no doubt received as advances for supply of garnet, had remained static without depletion of any sort and more importantly, not been claimed in the previous years. This pre-condition to the application of section 41(1) has not been satisfied in the instant case. The case of T.V.Sundaram Iyengar turned on two facts distinguishable from the present case that the deposits received from the customers had remained unclaimed and become barred by limitation and that TVS itself, treated the money as its own, crediting it to the Profit and Loss account. No reference is made to section 41(1) or the compliance of the condition thereunder. The judgments of the Supreme Court in the case of Kesaria Tea Company (2002 (3) TMI 1 - SUPREME Court) and Polyflex (India) (2002 (9) TMI 4 - SUPREME Court) would be more relevant to the facts and circumstances of this case. - Decided in favour of assessee.
|