9911796707
TMI Blog2015 (7) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... ot applicable to this case. 3. "Ld. CIT(A) erred in law and on the facts of the case in not sustaining the addition at least to the extent the assessee increased its reserve. The amount of Rs. 4.56 crores ( i.e. Rs. 5.64 crores - Rs. 82.65 lakh - Rs. 25.40 lakh ) has been transferred to the reserve account without paying tax on it which is definitely a benefit arising from the business of the assessee which is taxable under section 28(iv) of the I.T. Act 1961. 4. "The appellant craves to add, alter, amend and withdraw any ground of appeal before or during the course of hearing of the appeal." 3. The brief facts of the case are that the e-Return declaring NIL income was filed on 29.9.2009 and the same was processed u/s. 143(1) of the I.T. Act, 1961 (hereinafter called "the Act") and later on picked up under CASS for scrutiny by issuing of notice u/s. 143(2) of the Act and the same was duly served on the assessee. In response to same, Assesse's Authorised Representative of the Assessee attended the hearings. 3.1 The assessee company is engaged in the business of Finance and Export. However, during the year, there was no business activity except receipt of interest and some hir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as adjudicated the issue in dispute as under:- "As per the scheme of arrangement approved by the honorable High Court of Delhi vide order dated 07.11.1997 read with Memorandum of Understanding (MOU) dated 2nd April, 1997 and Addendum dated 3rd & 15th December, 1997 among the company, Tinna Oils & Chemicals Ltd. and Archer Daniels Midland Singapore Pte Ltd., movable assets, liabilities and investment of spin off division Of Tinna Oil & Chemicals Limited, as per its audited Balance Sheet as on 31/3/1997 got vested with the appellant company i.e. Tinna Finex Limited (for short TFL). Besides this 91,10,170 equity shares of Rs. 1 0/- each fully paid up in Tinna Finex Limited were allotted to existing share holders of Tinna Oils & Chemicals Limited, in the ratio of 1: 1 as per the scheme (Notes on accounts no.3b to the Audited balance sheet as on 31/3/1998) (PB-164). The total amount due to the Banks as per Sch-C of secured loan and note no. 2 of notes on accounts to the audited balance sheet as on 31.3.1998 of the appellant company were Rs. 11.22 Crores (PB-152). Tinna Group of companies were being run as a family business between Mr. Bhupinder Kumar Sekhri, Mr. Vijay Sekhri & Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Net amount of loan from Tinna Overseas Ltd. W/back Rs. 4,56,44,611/- (Schedule 'A' to audited Balance sheet as on 31/3/2009) As such, as per family settlement, a sum of Rs. 4,56,44,611 / - has been credited to Reserve & Surplus by the appellant company and as per clause 4.9 of the scheme of arrangement, Tinna Overseas Limited reduced its Reserve & Surplus accordingly. Section 41(1) of the Income tax Act, 1961 says that any loss, expenditure or trading liability incurred by the assessee and subsequently recovered by him is taxable as income in the year of recovery and it is applicable not only to the assessee who claimed such deduction but also to his "successor in business". It covers any person who succeeds to the business of another, viz in the case of companies amalgamating company, in the case of firms, the succeeding firm and the resulting company in the case of demerger. In this case AO has not proved that there was recovery of any loss or expenditure or trading liability which was allowed as deduction while computing the income in earlier years. On merits as well as on legal grounds there is no scope for invoking provisions of S. 41(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 10,83,949/- & loss of Rs. 4,29,049 has been claimed. During the year under consideration assessee has credited amount of Rs. 4.56 Cr to the reserves & surplus. We further note that in consideration thereof the company issued 91,10,170 shares of Rs. 10/- each and also takeover the bank loan of Rs. 11.22 Crores. The assessee company was a subsidiary of Tinna Overseas Ltd (Tal). Tinna Overseas Ltd was a corporate guarantor for the bank loan. The company paid off part of the bank loan and since it was not able to pay part of the bank loan of Rs. 5.64 Crore, the Tinna Overseas Ltd being guarantor, paid off this loan during the year 2002-03. Accordingly the bank loan got substituted with the loan from Tinna Overseas Ltd and continued till 2009. In the year 2009, consequent to order passed by the company Law Board, the above loan was written off after adjustment of investments held by appellant company of Rs. 108,05,250/-. Thus, there was net loan of Rs. 4,56,44,611/- which got written off and was credited to Reserves and Surplus account. 8.3 After going through the provisions of section 41(1) of the income tax act, we find that the same are not applicable to the facts of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
