TMI Blog2017 (3) TMI 1382X X X X Extracts X X X X X X X X Extracts X X X X ..... and dealing in shares, filed its return of income on 02/06/2008, declaring income of ₹ 33.99 lakhs.The Assessing Officer (AO)completed the assessment u/s.143(3) of the Act,on 31/12/2009, assessing its income at ₹ 93.69 lakhs.Subsequently,a notice u/s.148 of the Act was issued on 25/03/2011.The AO completed the assessment u/s.143r.w.s.147determining its income at ₹ 10.12 crores. 2. Effective ground of appeal is about deleting an addition of ₹ 8.65 crores u/s.41(1) of the Act. During the assessment proceedings, the AO found that the assessee had credited ₹ 9.91 crores to profit and loss account under the head sundry balances written back,that in the computation of income waiver of loan/debt of ₹ 8.65 crores was reduced from the net profit claiming that same was not taxable u/s.28(iv) of 41(1) of the Act.He directed the assessee to furnish the details of receipts recognised by waiver of loan/debt with documentary evidences and to show as to why the same should not be added back to its income under either of the two sections. In response to the same, the assessee filed detailed reply vide its letter dated 25/10/2009 along with a copy of scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he accounts of the above-mentioned for entities. He further held that facts of the case of Sundram Iyengar and Sons (supra) were distinguishable and were not applicable to case under consideration. Finally, he allowed the appeal filed by the assessee. 4. During the course of hearing before us, the Departmental Representative (DR) supported the order of the AO and stated that the assessee itself had admitted that out of the loan amount of ₹ 10.01 crores ₹ 1.48 crores was on account of discounting charges claimed in the assessment year 2007 08, that out of the said amount ₹ 1.26 crores was already offered to tax, that the settlement/waiver of the amounts payable by the assessee was on account of loans taken by the amalgamating company which no longer existed, that the provisions of section 41(1) were clearly applicable with regard to the disputed transactions. The Authorised Representative (AR) argued that the assessee had not claimed any deduction/allowance in the earlier years, that the loan were of capital nature, that the provisions of section 28(iv) or 41(1) were not applicable. She further stated that in one of the group entities the tribunal had delibe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng plant and liability is also carriying other business. Thus the assets and liability including manufacturing plant was taken over by M/s Lovin Care Product Pvt. Ltd in the said agreement for a consideration for a consideration of ₹ 100,000/-, and the consideration of Rs. one lacks was in excess of assets and liability of Orgo Pharmaceuticals. And as per the details of assest and liability of Orgo Chemicals , the assest was of ₹ 163,44,43,978/- and Liablity of ₹ 163,44,43,978/-. M/s Orgo Chemical was extended a loan of ₹ 4,04,02,671/- by M/s Landmark Builder which is unit of M/s Synchem Chemical(I) Pvt. Ltd. And this loan was advances to M/s Khandelwal Estate by Orgo, which was used for the payment of loan of HDFC. 9. It was further explained to the AO that the loan which Zyma Lab Ltd has written off is a part of liability which it has received from partnership firm of Orgo Pharma Chemical through Lovin Care Product Pvt Ltd which was amalgamated and later this Zyma Discharged this liability of loan of ₹ 40402671/-on settlement with Kotawala India Ltd by paying a consideration of ₹ 32,00,000/-. And after the amalgamation of loan of Lovin ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that it had not paid any interest to the Landmark Builder nor claim any interest and further concluded that neither the assessee claimed deduction in FY-2002-03 nor Orgo Pharma Chemical claimed as interest as deduction for FY-2005-06 2006-07 by M/s Orgo Pharma Chemicals and further concluded that if deduction is claimed by the assessee in the return of income then section 41(1) is not attracted. 12. The CIT(A) further concluded that M/s Orgo Pharma Chemicals entered into business transfer agreement in which certain liability and assets were transferred to M/s Lovin Care Pvt. Ltd. on 01.01.2004 for a consideration of ₹ 1,00,000/-. 13. While considering the various transactions in between Orgo Pharma till the assessee, the CIT(A) concluded as under: 4.3 (v) Further to satisfy the condition for Succession of business in this case, as per I. T. Act Explanation 1 to sec.41(1) examine the details of transfer of M/s.Orgo Pharma Chemicals entered business transfer agreement in which certain liabilities and assets were transferred to M/s. Lovin Care Products P. Ltd. on 01.01.2004 for a consideration of ₹ 1,00,000/-. The assets transferred from partnership ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f repayment of loan which was assigned on account of scheme of amalgamation which was approved by Hon ble Bombay High Court and in the case of T.V.Sundram, the assessee was given trading advances which were adjusted by carrying on the business and credit balance standing in favour of the assessee were claimed by the customer, the assessee transferred the said amount to Profit Loss A/c and the case of Solid Containers Pvt. Ltd., the fact of the present case is also at the variance and Solid Containers, the assessee has taken a loan for purchase of Car and deducted the amount from Profit Loss a/c and further claimed deduction but in the present case there was no deduction from return of income from any of the predecessor interest of the assessee rather it is an assignment of liability on transfer/amalgamation of company and assets and the CIT(A) after considering the entire fact available before him, the addition was deleted. 15. So as discussed above, we do not find any infirmity or illegality in the order passed by CIT(A) while deleting the addition of ₹ 4,04,02671/- 16.In the result, the appeal filed by the revenue is dismissed. Considering the above discussi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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