TaxTMI 
TaxTMI 
2001 (10) TMI 12
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....y, was incorporated in the year 1974-75 as required under the Companies Act, 1956. Since 1976, the company was operating its factory at Nandesari, District Baroda, wherein commercial A production of various inorganic chemicals was being carried on. The assessment year is 1982-83 and the accounting period is the year ended on June 30, 1981. The company maintained its accounts as per the mercantile system of accounting. In the course of carrying on its business, the company had obtained unsecured loans from various creditors, and in the light of the financial difficulties faced by the company, the creditors approached the High Court by filing various company petitions. During the course of those proceedings, it transpires that, a compromise w....
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....ch liability had been remitted by the creditors of the company, and thus a benefit had been obtained by the assessee-company which was liable to payment of tax g under section 41(1) read with section 28(iv) of the Act. Section 41(1) as was applicable for the assessment year under consideration reads as under: "(1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability H incurred by the assessee, and subsequently during any previous year the assessee has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amoun....