TaxTMI 
TaxTMI 
2014 (1) TMI 1268
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....he assessees in these appeals except the figure read as under:- "1. The Ld. CIT(A) erred in holding that the gains arising u/s 41 (1) was taxable in the hands of the appellant firm though no amount was actually received or foregone by it. 2. The Ld. CIT(A) erred in holding that the deed of assignment was executed to transfer the right to receive the refund which is nothing but application of income which had all along belong and accrued to the appellant firm. 3. The Ld. CIT(A) erred in holding the amount though not received by the appellant firm was applicable in the hands of the appellant firm and further erred in confirming the addition of Rs. 9,78,928/- though no amounts was actually received or receivable by the firm or its partners.....
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.... u/s 144 r.w.s. 147 taxing the entire amount of Rs. 9,82,527/- (9,78,928+3599) in the hands of assessee-firm. 5. The matter was carried to CIT(A) and the CIT(A) deleted the addition by applying the ratio of the decision of Hon'ble Gujrat High Court in the case of Banyan and Berry 222 ITR 831. On further appeal, the Hon'ble ITAT vide its order 20-12-2012 set aside the matter to the file of AO with following directions:- "But in the present case at hand, the facts are not similar as rightly pointed out by the learned DR. In this case, the assessments of the respective dissolved firms have been made in respect past assessment years to which the amount received relates to. The amounts in question are the refund relating to the assesses firms,....
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....any and by invoking the provisions of Section 189(1) r. w.s. 176(3A). 7. Against this order of AO assessee went in appeal before Ld. CIT(A) and before him it was argued that as per the deed of assignment all assets and liabilities were transferred to M/s Hemraj Trading Company at a price and that there was no evidence to show that sales tax refund were due and had become due at a time signing of the assignment deed. It was further stated that the partners of M/s Hemraj Trading Company were separate and distinct from the partner of assessee-firm and it cannot be said that the assignment was with a view to evade tax. It was further emphasized that the sales tax refund etc were received by M/s Hemraj Trading Company and neither the assessee-f....
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....has not become final as per decision of Supreme Court in the case of Union of India vs J.K. Synthetics 199 ITR 14 and Bharat Iron and Steel 199 ITR 67 (Guj) and deleted the addition in the case of assignee. The said action and the logic was upheld by Hon'ble ITAT but it was observed by the Hon'ble ITAT that AO could revoke the provision of Section 189 r.w.s, 41(1) for bringing to tax the remission of liability in the case of assignor firms. In view thereof, the assessment of the appellant firm was reopened and the refund amount and other claims were taxed in its hands. The CIT(A) in the second round deleted the addition relying on the decision of Gujarat High Court in the case of Banyan & Berry 222 ITR 831 holding that the amount received a....
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....erns of the appellant and the entire factual matrix comprising of events such as transfer of assets and liability of profit making firms at paltry sum to a new firm which took over the assignor firms being fully aware of the large receivables in the form of sales tax refunds. The device is to avoid applicability of provision of Section 41(1) and Section 189 r.w.s 176 (3A). In my humble view the decision of Hon'ble Supreme Court in the case of McDowell would have relevance under such set of facts. 4.2.2. Further, it would be relevant to refer to provision u/s. 41(5) which indicate that even if the business of profession is no longer in existence and there is any loss which cannot be set off against any other income then such loss could be s....
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....be upheld. 11. After hearing both the parties and perusing the record, we are inclined to follow the order of Hon'ble Tribunal in the case of assessee dated 20-12- 2007 which was passed by it subsequent to the order of Tribunal in the case of M/s Hemraj Trading Company. We further find that directions given by the Tribunal to the assessing officer were very clear that only if the amount has been received by the partners of the firm, the same can be taxed in the hands of the assessee. Before assessing officer partners have field affidavits mentioning that no such amount has been received by them which were accepted by assessing officer. Even then he has gone ahead with taxing this amount in the hands of the assessee-firm which in our consid....