1989 (10) TMI 20

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..... ned with the assessment year 1975-76 for which the previous year ended on December 31, 1974. In 1968, the assessee purchased certain items of machinery at a cost of 37,486 American dollars. Atlanta Corporation, New York, was the financier. Out of the amount so due, the assessee had paid a sum of 3,592 American dollars in October, 1968. The balance of 33,894 dollars was outstanding till the year ended December 31, 1973. In between 1968 and 1973, the assessee had sustained substantial loss in business. It could not repay the debt it owed to Atlanta Corporation. The debt so owed to the Corporation comprised of other amounts remaining to be paid to the said Corporation by the assessee, wherein was included the balance of the amount due, which w .....

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..... y of the assessee which was remitted by Atlanta Corporation. The Tribunal found that the liability that was remitted during the year ended December 31, 1973 was not merely the liability of the assessee towards the purchase of these machinery but also other liabilities. The Appellate Tribunal, after review of the facts and circumstances, came to the conclusion that the cost of the machinery to be paid by the assessee was not met by Atlanta Corporation. All that the Atlanta Corporation did was to act as a financier to provide funds. In these circumstances, the Appellate Tribunal came to the conclusion that the remission of the liability that was outstanding to Atlanta Corporation is an entirely different event, which cannot be equated in term .....

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..... ing out the written down value for the assessment year, he should reduce from the original cost the sum of Rs. 2,56,757 and also the depreciation actually allowed to the assessee in the past. We are unable to accept the submission. The Appellate Tribunal has categorically found that Atlanta Corporation is only a financier and when Atlanta Corporation wrote off the liability of the assessee, it cannot be said in retrospect that the cost to the assessee of any part of the machinery purchased in 1968, was met by Atlanta Corporation. The Appellate Tribunal held that the remission of liability by Atlanta Corporation long after the liability was incurred cannot be relied on to hold that Atlanta Corporation met directly or indirectly, part of the .....

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