2013 (7) TMI 777

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....inate Bench of this Court has admitted the appeal on the following substantial question of law:- "Whether on the fact and circumstances of the case the Income Tax Appellate Tribunal was justified in holding that the provision of Section 41(1) of the Income Tax Act, 1961 is not applicable." The brief facts of the case are that the assessee is a State Industrial Investment Corporation, which was established for promoting industrial growth in the State of U.P. It is engaged in providing financial assistance to industrial units by way of equity participation, term lending and by way of loan on lease of assets. During the assessment year under consideration, the assessee-Corporation had shown non refundable interest free unsecured loan of ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....n to the extent of Rs.26.03 crore. This is clearly a cessation/remission of trading liability and assessable under Section 41(1) of the Act. Lastly, he made a request that the impugned order passed by the Tribunal may kindly be set aside where the addition was deleted. On the other hand, Sri S.K. Garg, learned counsel for the assessee has justified the impugned order. He submits that the State Government is 100% shareholder in the company since the assessee is granting the loan in various forms and providing financial assistance to industrial units in the State, it often suffers loss on account of non recovery of financed money. The State Government has converted the part of the loan as non refundable interest free unsecured loan to the ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not; or (b) the successor in business has obtained, whether in cash or in any other manner whatsoever, any amount in respect of which loss or expenditure was incurred by the first-mentioned person or some benefit in respect of the trading liability referred to in clause (a) by way of remission or cessation thereof, the amount obtained by the successor in business or the value of benefit accruing to the successor in business shall be deemed to be profits and gains of ....