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2017 (12) TMI 795 - AT - Income TaxAddition u/s 41 - “remission” or “cessation” of liabilities - Held that:- In the case in hand, we observe that in first instance receipt of share application money does not result in generation of creditors or trade liabilities. Secondly, the assessee throughout reflected share application money in its Balance Sheet acknowledging receipt of such amount, therefore, “remission” or “cessation” of liabilities by flux of time does not arise. Thus, in view of the facts of the case and judgments referred above, we hold that share application money received by assessee and duly reflected in the Balance Sheet against which the shares have been allotted by following due procedure of law in the succeeding assessment year cannot be treated as remission/cessation of liability. The provisions of section 41(1)(a) were wrongly invoked by the Assessing Officer to tax share application money. Accordingly, the impugned order is set aside and the appeal of assessee is allowed.
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