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M/s. India Cements Capital and Finance Limited Versus The Assistant Commissioner of Income Tax

2017 (12) TMI 679 - MADRAS HIGH COURT

Addition u/s 41 - remission of liability - Held that:- Tribunal did not render a final finding, but it was of the prima facie view that there is a remission of liability in favour of the assessee company and that this is the paramount issue, which the Assessing Officer has to examine. Thus, the Assessing Officer, having examined and held against the assessee, which decision was reversed by the Commissioner of Income Tax (Appeals), the Tribunal should consider as to whether the Commissioner of In .....

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t the matter should be remanded to the Tribunal for a fresh consideration. - Accordingly, the above tax case appeal is allowed, the impugned order is set aside and the matter is remanded to the Tribunal for a fresh consideration - Tax Case Appeal No. 588 of 2017 - Dated:- 7-12-2017 - T. S. Sivagnanam And K. Ravichandrabaabu, JJ. For the Appellant : Mr. R. Venkatanarayanan for M/s.Subbaraya Aiyar Padmanabhan For the Respondent : Mr. Karthik Ranganathan, SSC ORDER Judgment was delivered by T. .....

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n favour of assessee company and has to be taxed under Section 41(1) of the Act while the entire assets and liabilities at book value was transferred to a special purpose vehicle M/s.Unique Receivable Management P. Ltd. and there being no waiver or benefit accruing to assessee on account of transfer ? ii. Whether on the facts and circumstances of the case, the Tribunal was right in law in holding that there was a categorical finding of cessation/ remission of liability under Section 41(1) of the .....

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n of liability under Section 41(1) of the Act ? and iv. Whether on the facts and in the circumstances of the case, the provisions of Section 41(1) of the Act are attracted in respect of waiver of loans, which have not been allowed as a deduction earlier ?" 3. The present appeal arose out of an order passed by the Income Tax Appellate Tribunal, by which, the Revenue's appeal was allowed and the deletion of addition made on account of cessation of bank liability to the extent of ₹ 4 .....

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the Special Purpose Vehicle (SPV), which is evident from Clause 5 of the agreement entered into between the parties. Thus, on a consideration of the terms and conditions stipulated in the tripartite agreement, the Commissioner of Income Tax (Appeals) held that there was no liability in the hands of the assessee, because the liability had been transferred to the SPV. 5. The reason for considering this issue arose on account of an earlier order passed by the Income Tax Appellate Tribunal in ITA.87 .....

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d by the Assessing Authority in the assessment order." The above observation made by the Tribunal ultimately led to the impugned order, which has been passed by the Tribunal. 6. The Commissioner of Income Tax (Appeals) was satisfied with the assessee's contention and had allowed the appeal. Thus, it is to be seen as to whether the finding rendered by the Commissioner of Income Tax (Appeals) was just and proper. Paragraph 7 of the impugned order has dealt with the said issue in the follo .....

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has been claimed and allowed by the Assessing Officer in the earlier years and if 'yes', the taxability of the remission of bank liability should be examined by the Assessing Officer under relevant provisions of the Act. The learned Assessing Officer, consequent to this, examined the issue and observed that there is remission of bank liability accrued to the assessee at ₹ 46.05 Crores. Contrary to this, learned Commissioner of Income Tax (Appeals) observed that there was no cessati .....

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41(1) of the Act. Accordingly, the ground raised by the Revenue is allowed." 7. From the above extracted paragraph, it is evident that the Tribunal, after noting the finding rendered by the Assessing Officer, observed that the Commissioner of Income Tax (Appeals) held that there was no cessation of liability in the hands of the assessee and it was only in the hands of the SPV and that if any cessation is to be considered, it has to be in the hands of the SPV. However, the Tribunal, while h .....

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