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TMI Blog2017 (2) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... d in concluding that liability of Rs. 6,34,12,696/- due to Paradigm Geophysical Sdn Bhd Malaysia has ceased to exist on 31 March 2008 and hence confirming the addition of AO of this amount to the total income of assessee in the relevant assessment year. (ii) Without prejudice to the above, the learned Commissioner (Appeal) erred in confirming the action of AO in not allowing a deduction under section 10A on the amount of Rs. 6,34,126,96/- added by him without appreciating that the remission of liability form part of section 41(1) and hence the same is required to be considered in computing deduction under section 10A. 2. The brief facts of the case are that the return of income was filed by assessee on 30 September 2008 declaring total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of remission was taken only after the management discussion in June/ July 2008, which is duly disclosed in the letter dated 21st August 2008. It was further argued that in the letter dated 21 August 2008 it is clearly demonstrated that the debt was existing in the books of creditor as on 31st mark 2008 and was waived only in June/July 2008. This letter was submitted before AO during the assessment proceedings as well as before ld Commissioner (Appeals) and the same was not considered by them. With regard to the notes of account the ld AR of the assessee argued that the contention regarding the AS requirement under the companies act was not disputed by the revenue authorities. On the other hand ld DR for revenue supported the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as income only for Financial Year 2008-09. The contention of the assessee was not accepted by AO concluding that it is a transaction between Associated Enterprises who would have joint economic interest. The AO also concluded that by shifting the income to the subsequent assessment year in which the assessee has returned a loss of Rs. 10,59,90,776/- thus the assessee has managed to get off without paying any tax. Before the Commissioner (Appeals) the assessee contended that the assessee out of the Management Fees of Rs. 8,44,05,218 /- an amount of Rs. 2,09,92,522 /-has already disallowed in AY 2007-08 and the addition have been erroneously. The assessee in alternative contended that AO not allowed the deduction under section 10A to the exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided documents which prove the liabilities stood as on 31.03.2008 and the same was waived in August 2008. In this regard it is mentioned that assessing officer on page 3 of his order has referred to the undated letter which is being relied upon by the appellant. A copy of this letter has been produced before me during the course of appellate proceedings. On perusal of the same it is noted that this letter does not bear the date and hence cannot be entertained as evidence that the waiver took place after 31.03.2008. Further, in the said letter there is no reference of meeting held in June/July 2008. Despite affording opportunity to the appellant during the course of assessment proceeding and also during the appeal proceeding before me, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ization of remission of liability, and also based on account of the inability of the appellant to prove that the waiver did not take place in the current financial year. Hon'ble Bombay High Court in case of Killick Nixon Ltd Versus DCIT 81 CCH 066 on similar facts observed that whenever there is reason to believe that the appellant is not real, then they taxing authorities are entitled to look into surrounding circumstances to find out the reality and apply the test of human probabilities. The judgment of Hon'ble Supreme Court in Vodafone International Versus Union of India makes it clear that a colorable device cannot be part of tax planning. Such transaction cannot be considered to be a part of tax planning or legitimate avoidance of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of assessee. 8. We have perused the order of authorities below. The assessing officer in para 5 of his order has considered the applicability of section 10A and disallowed holding that section 10A would apply only to the income that has been brought into India by way of convertible Foreign Exchange as no Foreign Exchange had been brought into India no deduction was granted under section 10A. The learned Commissioner (Appeals) while considering this ground of appeal concluded that no additional fact have been brought on record by the assessee during appellate stage thus he had no reason to deviate from the finding of the Assessing Officer. However, we are of the consiredered view that no material had been placed on record by ld AR for as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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