https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=384266 https://www.taxtmi.com/caselaws?id=384266 Cessation of liability u/s 41(1) - conversion of the loan as well as the unpaid interest into share capital - HELD THAT:- When there was no writing off of liabilities and only the sub-head, under which, the liability was shown in the account books of the assessee was changed, there could be no cessation of liability. As pointed out earlier, remission is a positive conduct on the part of the creditor and cessation may accrue either by operation of law and it may also accrue by way of a judicial pronouncement, absolving the assessee from the liability or if there is a contract between the parties whereby the liability gets extinguished or it may come to an end by discharge of the debt. However, some benefit accrued to the assessee by virtue of remission or cessation of liability, as the case may be. When the assessee company was liable to pay and it continued to remain liable even after change of entries in the books of account, no benefit would accrue to the assessee company merely on account of change of nomenclature and consequently the question of treating the same as profit and gain would not arise. The decision in Auto Kashyap India (P) Ltd [ 2010 (4) TMI 53 - DELHI HIGH COURT] is applicable in full force to the assessee s case. As decided in M/S INDO WIDECOM INTERNATIONAL LTD. [ 2017 (12) TMI 678 - ALLAHABAD HIGH COURT] the fact that the assessee adjusted subsequent sales to the holding company with share application money then held that Section 41 would not be applicable. By virtue of the Government Order in G.O.No.18 dated 07.03.2001 where the Government converted the existing Government loans, advances and interest outstanding into equity share capital, the assessee company had discharged its interest liability in the sense that instead of making payment in cash, it issued share capital to Government. Consequently Section 41(1) not stand attracted to the case of the assessee. Therefore, the finding rendered by the Tribunal is perfectly valid. Taxability of conversion of the loan and unpaid interest into share capital u/s 28(i) - whether the Revenue could be permitted to raise alternate submission at this juncture, for the first time, without even raising a supplementary ground in this appeal? - HELD THAT:- The decision in CIT VERSUS JINDAL EQUIPMENTS LEASING AND CONSULTANCY SERVICES LTD. [ 2009 (12) TMI 364 - DELHI HIGH COURT] will, in no manner, render assistance to the Revenue s case. They would be entitled to raise an alternate plea when Section 28(iv) stands attracted. Such a belated plea without amendment of the ground and raising the same for the first time before this Court during the course of argument cannot be permitted. Therefore, we reject the alternate submission made by the learned Senior Standing Counsel for the Revenue. - Appeal filed by the Revenue is dismissed Case-Laws Income Tax Tue, 09 Jul 2019 00:00:00 +0530