TMI Blog2013 (7) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... l) No.184 of 2010 - - - Dated:- 18-6-2013 - Chitra Venkataraman And K. B. K. Vasuki,JJ. For the Appellant : Mr. N. V. Balaji For the Respondent : Mr. C. V. Rajan for Mr. R. Venkata Narayanan JUDGMENT (Judgment of the Court was delivered by Chitra Venkataraman,J.) The Revenue is on appeal as against the order of the Income Tax Appellate Tribunal, Madras 'B' Bench, dated 29.05.2009 in ITA.No.309/Mds/2009 relating to the assessment year 2001-02, raising the following substantial questions of law: "1. Whether on the facts and the circumstances of the case, the Tribunal was right in holding that claim of deduction of interest, in the return which was allowed to become non est, by opting not to rectify the defects, pursuant to notice under Section 139(9) cannot be treated as disallowance of deduction? 2. Whether on the facts and circumstances of the case, the Tribunal was right in consequently holding that the interest waived by the bank for the prior period pertaining to assessment years 1994-95 to 1998-99 during financial year pertaining to assessment year 2001-02 cannot be assessed as income that arose due to cessation of liability under Section 41(1) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) and restored the matter to the Assessing Officer with a direction to decide the issue afresh after providing adequate opportunity. Thus the Assessing Officer passed fresh assessment order, holding that even though the return for the assessment years 1994-95 to 1998-99 was non-est in the eye of law, when the assessee had not complied with the intimation under Section 139(9) of the Act, the claim of the assessee for deduction of interest for the assessment years 1994-95 to 1998-99 was deemed to have been allowed. However, the assessee was not allowed to carry forward the loss on account of the amount treated as non-est. Thus, the income deemed in terms of Section 41(1) of the Act relating to the interest was added. 4. It is seen from the order of assessment that from the details given as regards the interest debited and concession allowed by the Bank on the One Time Settlement claim relating to the assessment years 1988-89 to 1993-94 totalling to a sum of Rs.55,58,381/-, the assessee itself admitted that this amount of Rs.55,58,381/- could be considered for the purpose of assessment under Section 41(1) of the Act. The interest referable to the assessment years 1999-2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted fact, that the returns were treated as non-est in the eye of law. There being no consideration on the granting of allowance or deduction by the Assessing Authority, there could be no addition under Section 41(1) of the Act. Thus, the assessee's appeal was allowed. Aggrieved by this, the present appeal has been filed by the Revenue. 8. Learned Standing Counsel appearing for the Revenue placed heavy reliance on the opening part of Section 41(1) of the Act and submitted that the expression "Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee" has to be read as a claim made in the accounts and it need not be followed by an assessment order. He further submitted that when the expression used in the Section does not contemplate an order to be passed on the claim, a mere entry made in the self-assessment made by the assessee in the account would be sufficient enough to invoke Section 41(1) of the Act; in other words, even in the absence of an assessment order passed on the question of allowance or deduction, the expression "where an allowance or deduction made for any year" ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er year." Thus, the Apex Court held that the reversal of recoupment of the relief granted would be available under Section 10(2A) if and only there had been deliberate act on the part of the Assessing Officer in considering such claim for deduction in the assessment. 10. Applying the said decision to the facts of the case, we find that the order of Income Tax Appellate Tribunal does not call for any interference. Section 10(2A) of the Indian Income Tax Act, 1922, reads as under: " Business.-- (1) ... (2A) Where for the purpose of computing profits or gains under this section, an allowance or deduction has been made in the assessment for any year in respect of any loss, expenditure or trading liability incurred by the assessee and, subsequently during any previous year, the assessee has received, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or has obtained some benefit in respect of such trading liability by way of remission or cessation thereof, the amount received by him or the value of the benefit accruing to him shall be deemed to be profits and gains of business, profession or vocation and to have accrued or arisen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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