TaxTMI 
TaxTMI 
2017 (3) TMI 1382
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....t and loss account under the head sundry balances written back,that in the computation of income waiver of loan/debt of Rs. 8.65 crores was reduced from the net profit claiming that same was not taxable u/s.28(iv) of 41(1) of the Act.He directed the assessee to furnish the details of receipts recognised by waiver of loan/debt with documentary evidences and to show as to why the same should not be added back to its income under either of the two sections. In response to the same, the assessee filed detailed reply vide its letter dated 25/10/2009 along with a copy of scheme of amalgamation and the order of Hon'ble Bombay High Court sanctioning the amalga -mation of Lupin Securities Ltd., Samiksh Investments Private Ltd., Santosh Leasing Private Ltd., Vishtosh Investments and Finance Private Ltd. and Zuari Leathers Private Ltd.with the assessee company. It also filed a copy of scheme of amalgamation of Lovincare with Zyma, deed of assignment of book debts dated 27/03/2004 and business transfer agreement dated 01/01/2004 between Lovincare and Orgo. After considering the submission of the assessee, the AO disallowed the claim made by it with regard to waiver of loans of Rs. 8,65,55,958/....
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...., that the settlement/waiver of the amounts payable by the assessee was on account of loans taken by the amalgamating company which no longer existed, that the provisions of section 41(1) were clearly applicable with regard to the disputed transactions. The Authorised Representative (AR) argued that the assessee had not claimed any deduction/allowance in the earlier years, that the loan were of capital nature, that the provisions of section 28(iv) or 41(1) were not applicable. She further stated that in one of the group entities the tribunal had deliberated upon the identical issue and had dismissed the appeal filed by the AO. She relied upon the cases of VS Dempo Company Ltd. (233 Taxman 41(1)7) and Velocient Technologies Ltd. (376 ITR 131). 5. We have heard the rival submissions and perused the material before us. We find that in the original assessment the AO had not invoke the provisions of section 28(iv)/41(1) of the Act, that in the reassessment proceedings he made an addition of Rs. 8.66 crores holding that there was cessation of liability we find that the AO has not given any finding about the nature of the loan. As per the settled principles of taxation if the loan is o....
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....delwal Estate by Orgo, which was used for the payment of loan of HDFC. 9. It was further explained to the AO that the loan which Zyma Lab Ltd has written off is a part of liability which it has received from partnership firm of Orgo Pharma Chemical through Lovin Care Product Pvt Ltd which was amalgamated and later this Zyma Discharged this liability of loan of Rs. 40402671/-on settlement with Kotawala India Ltd by paying a consideration of Rs. 32,00,000/-. And after the amalgamation of loan of Lovin care Product P Ltd and Zyma Laboratory liability initiated to discharge this liability and Synchem Chemicals which was the original concern which had advanced the loan which was assigned to Kotawal India Ltd and was entitled to recover an amount of Rs. 4,60,75,285/- from Zyma Laboratory Ltd. 10. The contention of assessee was not accepted by the AO and treated this amount as income chargeable to the tax was added to the business income. 11. The CIT(A) while dealing with the ground has observed that to satisfy the condition of section 41(1), three condition must be satisfied (i) the loan is for capital purpose or trading purpose, (ii) is there any deduction or allowance in the e....
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....tween Orgo Pharma till the assessee, the CIT(A) concluded as under: "4.3 (v) Further to satisfy the condition for Succession of business in this case, as per I. T. Act Explanation 1 to sec.41(1) examine the details of transfer of M/s.Orgo Pharma Chemicals entered business transfer agreement in which certain liabilities and assets were transferred to M/s. Lovin Care Products P. Ltd. on 01.01.2004 for a consideration of Rs. 1,00,000/-. The assets transferred from partnership firm M/s. Orgo Pharma Chemicals to M/s. Lovin Care Products P. Ltd. 1S Rs. 163,44,34,971/- and aggregated liabilities are Rs. 163,43,34,970/-. After the transfer also M/s.Orgo Pharma Chemicals is existing as a business concern and conducting the business and it is also filing income-tax returns in its own name i.e. M/s. Orgo Pharma Chemicals, Partnership Firm. If we examine sec.170 of I. T. Act in which succession was defined, it is evident that after the succession of business existing unit fully looses its identity and income-tax return will be filed up to the date of succession only, later successor files the income-tax return? .it 'does not even exist as business concern. But we examine ....