TaxTMI 
TaxTMI 
2013 (7) TMI 416
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....or period pertaining to assessment years 1994-95 to 1998-99 during financial year pertaining to assessment year 2001-02 cannot be assessed as income that arose due to cessation of liability under Section 41(1) of the Act?" 2. The assessment year under consideration herein relates to 2001-02. The assessee herein derived income from leasing of properties. It is seen from the facts narrated that the Assessing Officer brought to tax the amount waived by Canara Bank amounting to Rs.3.81 crores on the income chargeable under Section 41(1) of the Income Tax Act, 1961 (hereinafter called the "Act"). It is seen from the facts that during the assessment year under consideration, the assessee availed one-time settlement scheme of Canara Bank, by which the Bank waived the interest portion accrued and payable by the assessee, relating to the assessment years 1988-89 to 1998-99, which the assessee had claimed deduction in the return filed for the respective years. On account of the waiver granted by the Bank, the said interest amount became assessable as income as per Section 41(1) of the Act. According to the assessee, since the returns filed for the assessment years 1994-95 to 1998-99 were ....
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....of Rs.55,58,381/-, the assessee itself admitted that this amount of Rs.55,58,381/- could be considered for the purpose of assessment under Section 41(1) of the Act. The interest referable to the assessment years 1999-2000 and 2000-2001 of a sum of Rs.58,71,867/- and Rs.76,73,196/- respectively were disallowed and hence, not added back under Section 41(1) of the Act. The assessee, however, contended that there being no assessment in respect of the remission of liability for the assessment years 1994-95 to 1998-99, no addition could be made under Section 41(1) of the Act. In this connection, the assessee placed reliance on the decision of this Court in the case of Narayanan Chettiar Industries Vs. ITO reported in 277 ITR 426 (Mad) as well as the decision of the Supreme Court in the case of Tirunelveli Motor Bus Services Co. Pvt. Ltd. Vs. CIT reported in (1970) 78 ITR 55 and held that there could be no addition by invoking Section 41(1) of the Act. 5. The claim of the assessee that there could be no question of invoking Section 41(1) of the Act in the absence of explicit consideration of disallowance of interest in the assessment years was, however, negatived by the Assessing Offic....
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....ient enough to invoke Section 41(1) of the Act; in other words, even in the absence of an assessment order passed on the question of allowance or deduction, the expression "where an allowance or deduction made for any year" has to be considered as a claim made per se. He further pointed out that on the facts of this case, the assessee's returns were treated as non-est as per Section 139(9) of the Act; however, considering Section 140A of the Act, which provides for self-assessment, the assessee had remitted the tax based on self-assessment on the state of affairs. Thus, even in the absence of returns, the self-assessment being an assessment made for any year, the Income Tax Appellate Tribunal committed serious error in allowing the appeal filed by the assessee. 9. We do not subscribe to this submission of the learned Standing Counsel appearing for the Revenue. As rightly submitted by the learned counsel for the assessee, in the decision in the case of Tirunelveli Motor Bus Service Co. P. Ltd. Vs. Commissioner of Income Tax, Madras reported in 78 ITR 55, a similar contention was taken on the interpretation of Section 10(2A) of the Indian Income Tax Act, 1922, which is in pari mat....
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....ng liability by way of remission or cessation thereof, the amount received by him or the value of the benefit accruing to him shall be deemed to be profits and gains of business, profession or vocation and to have accrued or arisen during that previous year. " 11. Section 41(1) of the Income Tax Act, 1961, as is relevant for the present case, reads as under: "41. Profits chargeable to tax.--(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,-- ... " 12. Even though learned Standing Counsel appearing for the Revenue does not dispute the similarity of the provisions between the Indian Income Tax Act, 1922 and the Income Tax Act, 1961, yet, he emphasizes that the payment of tax being one under self-assessment and even though the return is non-est in the eye of law, by virtue of Section 139(9) of the Act, yet, one cannot ignore the state of affairs as regards the deduction claimed leading to the payment of tax. 13. We do not agree with the said view of the learned Stan....