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2020 (4) TMI 491 - HC - Income TaxAddition u/s 41(1) - waiver of unsecured interest free loans taken - accounting entries to be determinative of the nature of receipt or not ? - HELD THAT:- In the year under consideration, the assessee was not carrying any business activity in terms of the main object of the assessee company - while assessee had borrowed monies from Matrix Logistics Private Limited, it had not claimed any deduction or allowance in respect of the same - As decided in Kedarnath Jute Manufacturing Co. Ltd. v. CIT [1971 (8) TMI 10 - SUPREME COURT] the accounting entries cannot be determinative of the nature of receipt and what can be added to income under section 41(1) of the Act is something in respect of which, deduction has been allowed in the past In CIT v. Mahindra & Mahindra Ltd [2018 (5) TMI 358 - SUPREME COURT] on a perusal of sub-section (1) of section 41 of the Act, it is evident that there is a sine qua non that there should be an allowance or deduction claimed by the assessee in any assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee. Then, subsequently, during any previous year, if the creditor remits or waives any such liability, then the assessee is liable to pay tax under section 41 of the Act. In the facts of the present case, since the assessee has not claimed any allowance or deduction in respect of the unsecured loan obtained by it from Matrix Logistics Private Limited in any previous year, the provisions of sub-section (1) of section 41 of the Act would not apply. The Tribunal has, therefore, rightly applied the decisions of the Supreme Court in Kedarnath Jute Manufacturing Co. Ltd. v. CIT and CIT v. Mahindra & Mahindra Ltd. (supra) to the facts of the present case.- Decided against revenue
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