TMI Blog2018 (9) TMI 1631X X X X Extracts X X X X X X X X Extracts X X X X ..... iture or trading liability and subsequently during any previous year, such person has obtained some benefit in respect of such trading liability by way of remission or cessation, etc. Thus, in the assessee's case, when the software library was capitalized, it cannot be said that any benefit or remission or cessation of liability occurred. - Decided against revenue - Tax Case Appeal No.1224 of 2008 - - - Dated:- 11-9-2018 - T. S. SIVAGNANAM And V. BHAVANI SUBBAROYAN, JJ. For the Appellant : Mr.M.Swaminathan SSC For Respondent : Mr.A.S.Sriraman for Mr.S.Sridhar ORDER Judgment was delivered by T. S. Sivagnanam, J We have heard the learned counsel on either side. 2. This appeal by the Revenue has been directed agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of trading liability or receipt of any cash in respect of loss or expenditure. The assessee further explained that she had not received any money whatsoever towards cessation of any liability. 7. The Assessing Officer did not agree with the stand taken by the assessee, but held that as per Section 41(1) of the Act where an allowance of deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee and subsequently during any previous year the assessee had obtained either in cash or in any other manner whatsoever in respect of such loss or expenditure or some benefit with regard to such trading liability by way of remission or cessation thereof, the amount obtained by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was distinguishable, followed the decision of the Bombay High Court in the case of Mahindra Mahindra Vs. CIT [reported in 261 ITR 501] and further held that there should be a remission or cessation of trading liability whereas in the case of the assessee, it is only a case of creation of an asset (intangible asset and value of copy right in an exploited film). The CIT (A) further held that mere book entry does not create income. 10. The Revenue preferred an appeal to the Tribunal, which, by order dated 14.12.2007, concurred with the decision of the CIT (A) and dismissed the appeal filed by the Revenue. Challenging the same, the Revenue is before us by way of this appeal. 11. We have carefully considered the factual situation and we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court in the case of CIT Vs. Mahindra Mahindra Ltd. [reported in (2018) 93 Taxmann.com 32] wherein, after taking note of Section 41(1) of the Act, it has been held as follows: 15. On a perusal of the said provision, it is evident that it is a sine qua non that there should be an allowance or deduction claimed by the assessee in any assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee. Then, subsequently, during any previous year, if the creditor remits or waives any such liability, then the assessee is liable to pay tax under Section 41 of the IT Act. The objective behind this Section is simple. It is made to ensure that the assessee does not get away with a double ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of trading liability. Whereas in the instant case, waiver of loan amounts to cessation of liability other than trading liability. Hence, we find no force in the argument of the Revenue that the case of the respondent would fall under Section 41(1) of the IT Act. 17. To sum up, we are not inclined to interfere with the judgment and order passed by the High Court in view of the following reasons : (a) Section 28(iv) of the IT Act does not apply on the present case since the receipts of ₹ 57,74,064/- are in the nature of cash or money. (b) Section 41(1) of the IT Act does not apply since waiver of loan does not amount to cessation of trading liability. It is a matter of record that the respondent has not claimed any d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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