Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2017 (12) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (12) TMI 678 - HC - Income TaxAddition u/s 41 - cessation or remission of liability - Held that:- The fact that the assessee did not show the amount in its profit and loss account may itself not invite applicability of Section 41 of the Act. Treatment given in accounting entries does not give rise to taxable event. To invoke Section 41 of the Act, the initial burden was on the revenue to establish cessation or remission of liability of Rs. one crore. That burden was not discharged. In as much as it had been found by the CIT (Appeals) and the Tribunal that the amount of Rs. one crore received by the assessee from M/s Widecom Group INC. had been adjusted against the sale price payable to the assessee by that entity, there did not survive any scope to invoke section 41 of the Act in favour of the revenue. Thus Question no. 1 as raised in the memo of appeal is answered in favour of the assessee Cessation of liability in terms of provisions of Section 41(1) - Assessee company is a wholly owned subsidiary of Widecom Group Inc, Canada - Held that:- the assessee is a subsidiary of M/s Widecom Group INC is of no consequence in the facts and circumstances of the case. It is admitted that the two companies are separate juristic persons. Also, there is nothing to doubt the genuineness of the transaction of sale of goods made by the assessee to M/s Widecom Group INC. Thus, Question no. 3 is answered in favour of the assessee and against the revenue.
|