TMI Blog2020 (4) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... e added to income under section 41(1) of the Act is something in respect of which, deduction has been allowed in the past In CIT v. Mahindra Mahindra Ltd [ 2018 (5) TMI 358 - SUPREME COURT] on a perusal of sub-section (1) of section 41 of the Act, it is evident that there 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 Act. In the facts of the present case, since the assessee has not claimed any allowance or deduction in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Assessing Officer noticed that the assessee had credited ₹ 4,42,95,650/- in the profit and loss account being the interest free unsecured loan obtained from Matrix Logistics Private Limited in the previous year, the liability of which, ceased to exist on account of winding up of Matrix Logistics Private Limited by the order of the Gujarat High Court. The assessee had excluded the amount of ₹ 4,42,95,650/- in the computation of income contending that it was a capital receipt and could not be brought to tax. The Assessing Officer noticed that the assessee company was formed with the main object of carrying business of providing technological support services and the business of manufacturing and trading of medical support. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd held that the waiver of such loan was required to be taxed as income under section 41(1) of the Act on account of cessation of liability. 2.2 The assessee carried the matter in appeal before the Commissioner (Appeals), who held that sections 41(1) and 28(iv) of the Act were not applicable to the facts of the case and deleted the addition made by the Assessing Officer. 2.3 The revenue carried the appeal before the Tribunal but did not succeed. 3. Mrs. Mauna Bhatt, learned Senior Standing Counsel for the appellant, reiterated the grounds set out in the memorandum of appeal. 4. From the facts as emerging from the record, it is an admitted position that in the year under consideration, the assessee was not carrying any business a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor from his liability to repay. After such exercise, the debtor is deemed to be absolved from the liability of repayment of loan subject to the conditions of waiver. Hence, the waiver of loan by the creditor results in the debtor having extra cash in his hand. It is receipt in the hands of the debtor/assessee. The court held that on a perusal of sub-section (1) of section 41 of the Act, it is evident that there 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
