2017 (12) TMI 679

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....n ITA.No.1626/Mds/2012 dated 11.8.2016, raising the following substantial questions of law : "i. Whether on the facts and circumstances of the case, the Tribunal was right in law in holding that there is a remission of liability to the extent of Rs. 43 Crores in favour of assessee company and has to be taxed under Section 41(1) of the Act while the entire assets and liabilities at book value was transferred to a special purpose vehicle M/s.Unique Receivable Management P. Ltd. and there being no waiver or benefit accruing to assessee on account of transfer ? ii. Whether on the facts and circumstances of the case, the Tribunal was right in law in holding that there was a categorical finding of cessation/ remission of liabili....

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....e and the liability was on the transferee - the Special Purpose Vehicle (SPV), which is evident from Clause 5 of the agreement entered into between the parties. Thus, on a consideration of the terms and conditions stipulated in the tripartite agreement, the Commissioner of Income Tax (Appeals) held that there was no liability in the hands of the assessee, because the liability had been transferred to the SPV. 5. The reason for considering this issue arose on account of an earlier order passed by the Income Tax Appellate Tribunal in ITA.871/Mds/2011 dated 03.4.2012 in the assessee's own case. The said appeal was filed by the assessee relevant to the same assessment year namely 2006-07 challenging an order passed under Section 263 of t....

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....er relevant provisions of the Act. The learned Assessing Officer, consequent to this, examined the issue and observed that there is remission of bank liability accrued to the assessee at Rs. 46.05 Crores. Contrary to this, learned Commissioner of Income Tax (Appeals) observed that there was no cessation of liability in the hands of the assessee and it was only in the hands of URMP (SPV) and if any cessation is to be considered in the hands of URMP, we are not in a position to uphold the argument of the learned authorized representative as held by the Tribunal on earlier occasion. There is a remission of liability in favour of assessee company and the liability payable to the bank has been reduced to Rs. 43 Crores and it has to be brought to....