AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (4) TMI 756
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....e ground raised in the appeal of the assessee is with regard to assuming jurisdiction under section 263 of the Act and holding that the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue. 2. Brief facts of the case are that the assessee was engaged in the business of film production and filed his return of income for the assessment year 2007-08 declaring an income of Rs..3,897/-. The case of the assessee was selected for scrutiny and notice under section 143(2) of the Act was issued on 26.09.2008. After considering the submissions of the assessee, the Assessing Officer has noted that as per the statement, the gross total income of the assessee is Rs..1,22,03,894/- and the income has b....
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....2003- 04. Accordingly, the Assessing Officer completed the assessment order under section 143(3) of the Act dated 23.12.2009. 3. Against the above assessment order, on verification of record, the ld. CIT has found that Shri M.V.V.S. Moorthy had written off the principal amount of Rs..79,93,000/- and claimed it as bad debts written off in his account as on 31.03.2007. However, the assessee has shown this loan amount as a liability for the assessment year 2007-08. Since the loan was written off, the same amount being shown as a liability by the assessee should not have been set off and should have been taken as business income for the assessment year 2007-08. Since the Assessing Officer without considering the fact that the assessee had re....
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.... pronouncement of the Madras High Court in the case of ISKRAEMECO REGENT LTD. Vs. CIT 196 Taxman 103 wherein the jurisdictional Court clearly distinguished that the loan borrowed for capital should not be treated as income upon remission of the same. Neither 41 (1) nor 28(iv) has no implication on such remission. Respectfully following the jurisdictional High Court verdict where the facts and findings are similar to the proposal, to bring Rs. 79.93 lakhs representing capital remission as income of the petitioner would be incorrect and would be against the binding judicial pronouncement. " 5. Relying on the decision of the Hon'ble Madras High Court (supra), the assessee's representative has requested the ld. CIT for dropping of the pr....
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.... the loan transaction is towards the purchase of the capital asset as against the running of the regular business, the Hon'ble High Court has held that such a receipt would be a capital receipt. In this case, purpose is for running a business of film production. There is no evidence on record to show that the loan was purchase of any capital asset. Hence, the ratio of the decision of the case cited by the assessee's representative will not apply to the facts of the assessee's case where the assessee himself has treated the principal amount of Rs. 79.93 as capital receipt and treated the same as non taxable remission. Hence, I am of the considered view that the said amount of Rs. 79,93,000/- claimed as 'bad debts written off&....
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....TR 205 (Bom), the ld. Counsel for the assessee has pleaded that the order passed by the ld. CIT should be quashed. 8. On the other hand, the ld. DR has submitted that there are no two views and only one view is possible and supported the order passed by the ld. CIT. 9. We have heard both sides, perused the materials on record and gone through the orders of authorities below. The ld. CIT, while exercising power under section 263 of the Act came to a conclusion that the order passed by the Assessing Officer under section 143(3) of the Act dated 23.12.2009 is erroneous and prejudicial to the interest of Revenue for the reason that the ld. CIT, after examining the accounts of the assessee as well as IT records, observed that the loan liab....
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....urse of business of the assessee was only for the purpose of his business i.e. production of film and upon release of the film, certain principal amount was repaid. 11. Before us, the ld. Counsel for the assessee has relied on the decision in the case of CIT v. Xylon Holdings Pvt. Ltd. [2013] 90 DTR 205 (Bom), wherein, the assessee has taken loan from the holding company by virtue of which liability to pay car loan for which loan was taken continued to be a part of assets of assessee and depreciation thereon was also claimed by the assessee. The Assessing Officer added back the said amount to income of the assessee as being taxable under section 41(1) of the Act and the ld. CIT(A) allowed the appeal filed by the assessee. On appeal befor....