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2016 (2) TMI 526 - DELHI HIGH COURT

2016 (2) TMI 526 - DELHI HIGH COURT - TMI - Addition under Section 41(1) - ITAT deleted the addition - Held that:- The loan transactions were on the capital account and the writing off the loan was also on capital account and did not find place in the Profit and Loss Account. Apart from this it has been found as a matter of fact that the respondent / assessee had not got the benefit of any allowance or deduction in the assessment for any prior year in respect of loss, expenditure or trading liab .....

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is also reported in Commissioner of Income-Tax v. Tosha International Ltd, (2008 (9) TMI 31 - HIGH COURT DELHI ). Since the issue on law already stands settled by the said decisions of this court, no substantial question of law arises for our consideration. - Decided against revenue - ITA 113/2016 - Dated:- 15-2-2016 - Badar Durrez Ahmed And R. K. Gauba, JJ. For the Appellant : Mr Zoheb Hossain and Mr Dileep Shivpuri For the Respondent : Mr Pranjal Srivastava JUDGMENT Badar Durrez Ahmed, J (Ora .....

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the Income-tax Act, 1961. 2. The respondent company is engaged in the business of finance and export. In the year in question there was no business activity except for the receipt of interest and some hire charges. Against the gross receipts of ₹ 6,54,900/- the respondent company claimed an expenditure of ₹ 10,83,949/- resulting in a loss of ₹ 4,29,049/-. 3. During the assessment proceedings the Assessing Officer noted that an amount of ₹ 5,64,85,956/- shown as secured a .....

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er, the Assessing Officer invoked the provisions of Section 41(1) of the said Act and made an addition of ₹ 5,64,85,956/- to the income of the assessee and completed the assessment under Section 143(3) of the said Act by virtue of his order dated 28.12.2011. 4. As pointed out above, the Commissioner of Income Tax (Appeals) deleted the addition made by the Assessing Officer and found that Section 41(1) of the said Act was not attracted. Against the said decision, the revenue filed an appeal .....

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e assessee case. We also find that the AO has made the addition of ₹ 5.64 crores by invoking provision of sec. 41(1) of the Income-tax without stating how the provision are applicable to the assessee s case. Mere cessation of liability does not result into fit case of sec. 41(1) of the I.T Act. Assessee has submitted that assessee was not incurred any loss/expenditure/trading liability which is subsequently recovered by him is taxable as income in the year of recovery. We find that the ass .....

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Patel vs. DCIT (ITA No. 1675/AHD/2009) dated 30.10.2009 (ITAT Ahmedabad) (iii) CIT vs. Phool Chand Jiwan Ram (131 ITR 17) (Del.) (iv) CIT vs. Compaq Electric Ltd. (ITA No. 172 of 2011 dated 18.10.2011) (Karnataka HC) (v) CIT vs. Chetan Chemicals Pvt. Ltd. (267 ITR 770) (Guj.) (vi) Mahindra & Mahindra Ltd. vs. CIT (261 ITR 501) (Bom.) (vii) CIT-3 vs. M/s Cipla Investments Ltd. (ITA No. 6988 of 2012, dated 07.02.2012) (HC of Bombay) 8.4 We further note that it is well settled law that where no .....

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5 In view of the above, we find that the AO has not disputed the facts brought on record by the assessee company. In our opinion, the liability of ₹ 5,64,85,956/- as on 01.01.2009 in favour of M/s Tinna Overseas Ltd., was no longer required to be paid in view of the settlement. Similarly the assessee had foregone the investment in the shares and loan totalling to ₹ 1,08,41,345/- as per the terms of the settlement. The net gain to the assessee is ₹ 4,56,44,611/-. The assessee ha .....

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