TMI Blog2018 (9) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 41 of the Act. There was no remission or cessation of liability. - decided in favour of assessee - ITA No. 806/2018 - - - Dated:- 27-8-2018 - MR. SANJIV KHANNA AND MR. CHANDER SHEKHAR JJ. Appellant Through: Mr. Ruchir Bhatia, Advocate. Respondent Through: None SANJIV KHANNA, J. Present appeal by the Revenue under Section 260 A of the Income Tax Act, 1961 (the Act, for short) assails the order dated 5th February, 2018 passed by the Income-tax Appellate Tribunal ( Tribunal for short) in the case of New World Synthetics Limited (the respondent-assessee, for short). The appeal pertains to the Assessment Year 2005-06, for which year the respondent-assessee had filed its return on 30th October, 2005, declaring a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pped business operations during the period relevant to the Assessment Year 2000-01. 5. Section 41(1) of the Act, for the sake of convenience is reproduced below: Profits chargeable to tax. 41. (1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the first-mentioned person) and subsequently during any previous year,- (a) the first-mentioned person has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company, the amalgamated company; (ii) where the first-mentioned person is succeeded by any other person in that business or profession, the other person; (iii) where a firm carrying on a business or profession is succeeded by another firm, the other firm; (iv) where there has been a demerger, the resulting company. The provision states that when an assessee makes an allowance or deduction in respect of loss, expenditure or trading liability incurred, any amount obtained in cash or in any other manner; or when there is remission or cessation, the amount obtained or the value of benefit accruing by way of remission and cessation shall be deemed to be profit and gain of the business or profession. The word cessation in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or extinction and forfeiture of the liability. 9. Non-payment of outstanding liability which is admitted and acknowledged as due and payable by an assessee does not indicate remission or cession of liability. When an assessee suffers losses, payments and debts due including those due to financial institutions are not paid. Delay or nonpayment, even when the Assessing Officer is of the opinion that likelihood of payment was remote as business has stopped, would by itself not denote and mean cessation or remission of liability. In the winding up or bankruptcy proceedings, payments are made, mostly partly, on sale of assets. 10. In Bombay Dyeing Manufacturing Company Limited Vs. State of Bombay Ors., AIR 1958 SC 328 , it was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Commissioner of Income-tax, Gujarat, Ahmedabad AIR 1964 Guj. 208. The Supreme Court in Uttam Singh Duggal Co. Ltd. Vs. United Bank of India Ors. (2000) (7) SCC 120 has reflected and pronounced on admission in the balance sheet and accounts for the purpose of Order XII, Rule 6 of the Code of Civil Procedure. 12. Decision in the case of Polyflex (India) Pvt. Ltd. Bangalore Vs. Commissioner of Income Tax Karnataka (2002) 7 SCC 188 , is distinguishable, as in the said case assessee had received and obtained an amount in cash, which amount received was earlier recorded and treated as expenditure in the profit and loss account. In the said case excise duty paid had been refunded, though the Revenue had preferred an appeal and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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