TaxTMI 
TaxTMI 
2016 (2) TMI 750
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....A) has erred in deleting the addition of Rs. 16,41,000/- made U/s 145A on account of excise duty leviable on closing stock." 2. First we take the assessee's appeal. The sole ground of the assessee's appeal is against confirming the action of the Assessing Officer in treating a sum of Rs. 29,40,94,000/- as income of the assessee on account of remission of principal amount of loan. The assessee company filed its return of income on 25/09/2009 declaring NIL income. The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as the Act). The assessee is in manufacturing of woolen yarn and other items of wool. The company had been declared a sick company by the Board of Financial Reconstruction on 23/03/2001. During the course of assessment proceedings, it was noticed by the Assessing Officer that in computation, the assessee had added an amount of Rs. 18,15,03,000/- as taxable exceptional items. The details in respect of the same were given by the Assessing Officer on page No. 2 of the Assessing Officer, which is reproduced hereunder:- Amount in lacs "Exceptional Items as per P&L account 13322.33 Less: A. Remission in Prin....
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....course of trading transaction, even though it is not taxable in the year of receipt as being of revenue character, the amount changes its character when the amount becomes the assessee's own money because of limitation or by any other statutory or contractual right. When such a thing happens, commonsense demands that the amount should be treated as income of the assessee. The assessee had received deposits in course of its business which were originally treated as capital receipts. Some of the deposits were neither claimed by nor returned to depositors. There is no dispute that the deposits were received in course of the carrying on of the business of the assessee. Although it was treated as deposit and was of capital nature at the point of time it was received, influx of time the money has become the assessee's own money. What remained after adjustment of the deposits has not been claimed by the customer. The claims of the customers have become barred by limitation. The assessee has on its own treated the money as its own money and taken the amount to its profit and loss account. There is no explanation from the assessee why the surplus money was taken to its profit and loss accou....
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.... other hand, remission of principal amount. The assessee is getting benefit arising from business and therefore, remission is covered under section 28 (iv) of the act. Originally the amount received though was not of income in nature and amount remained with the assessee for a long period and by remission of the said amount, assessee became richer by said amount of remission and the assessee itself has treated the money as its own money. Therefore, in such circumstances and facts of the present case the amount so estimated is to be treated as assessable income of the impugned year in view of the decision of on the Supreme Court of India in the case of CIT V/s Sundaram lyenger and Sons Ltd, as law of land and decisions of a High Court and Tribunal relied upon by Assessee are not applicable in the present case. Therefore, we find no infirmity in the order of AO. The CIT (A) is not justified in reversing the order of AO." 3.4.2 The appellant has stated that the judgment of the Delhi High Court in the case of Tosha International (supra) was delivered after the above order of the ITAT which would change the legal position in this regard. IU have perused the case of Tosha Intern....
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....remission takes place. However, where the loan raised is for the purpose of acquiring capital assets the remission thereof will not be chargeable to tax irrespective of the fact where the depreciation on such capital asset has been allowed or not. Further he has argued that in the case before the Bombay High Court in Mahindra & Mahindra Ltd. Vs. CIT (supra) the issue was considered, the deduction claimed by the assessee by way of depreciation on the cost of machinery and toolings, was taxable U/s 41(1) of the Act. As the cost of machinery/toolings being forgone by Kaiser Jeep Corporation during the assessment year 1976-77. The Hon'ble Court has decided this issue in favour of the assessee and against the department. Further in the case of CIT Vs. Tosha International Ltd. (2011) 331 ITR 440 (Delhi) wherein the assessee was engaged in the manufacturing of black and white picture tubes. The assessee company ran into huge losses and it ultimately became a sick company and registered with the BIFR. Under the one time settlement scheme, the financial institutions and banks required the assessee to pay 60 percent of the amount due towards principal and waived the entire interest payment. ....
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....e following case laws on this issue:- (i) Accelerated Freez & Drying Co. Ltd. Vs. DCIT (2010) 1 ITR 226. (ii) Coastal Corporation Limited Vs JCIT 118 TTJ 563 Visakhapatnam. Therefore, he prayed to delete the addition. 5. At the outset, the ld CIT DR has vehemently supported the order of the ld CIT(A) and argued that the Hon'ble Jaipur Bench of ITAT in the case of ACIT Vs. M/s Modern Syndex (I) Ltd. and ACIT Vs. M/s Modern Denim Ltd. (which are also a group of the present assessee) in ITA No. 531, 532 & 533/JP/2009 and ITA No. 115, 192 and 534/JP/2009 order dated 18/12/2009 had confirmed the order of the ld CIT(A) on the present issue in appeal. Therefore, he prayed to confirm the order of the ld CIT(A). 6. We have heard the rival contentions of both the parties and perused the material available on the record. The assessee company is manufacturing of woolen yarn and other wool items and taken loan from bank and financial institutions. The assessee company had become sick company and before BIFR the banks/financial institutions had settled its outstanding loan whereby the principal loan amount of Rs. 29,40,94,000/- was written back. The loan was taken long....
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....he valuation of closing stock. The tax duty etc. incurred by the assessee means that these had become payable. It is clear that the moment goods are manufactured, excise duty becomes payable on them irrespective of the fact that they are lying un-cleared in the warehouse. Such duty is therefore, liable to be included in the value of the closing stock. The assessee has not included excise duty in closing stock, therefore, he made adjustment of Rs. 16.41 lacs in closing stock U/s 145A of the Act. 8. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had allowed the appeal by observing as under:- "4.4 I have perused the facts of the case, the assessment order and the submissions of the appellant. The appellant has submitted that as per section 4 of the Central Excise Act, 1944 read with Rule 49, excise duty becomes payable only when the goods are removed from the warehouse. In the instant case, it has been stated that goods were not removed from the warehouse. The appellant has relied on the case of CIT vs. Loknete Balasaheb Desai SSK Ltd. (supra). I have perused the case law and it is seen that it is directly a....