TaxTMI 
TaxTMI 
2018 (3) TMI 1193
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....he case are that the assessee is a wholly owned Government company engaged in industrial development in orissa and filed the return of income for the assessment year 2010-2011 on 28.9.2010 with NIL total income and subsequently filed the revised return on 29.6.2011 with total business loss of Rs. 6,56,56,115/-. The return was processed u/s.143(1) of the Act. During the course of assessment proceedings, the Assessing Officer found that out of total amount of Rs. 24,21,39,000/- credited to the profit and loss account, the assessee has deduced a sum of Rs. 50,00,000/- as exempt income while computing the total income. When asked by the Assessing Officer as to why the amount of Rs. 50,00,000/-was claimed as exempt, the assessee furnished its ex....
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....ted by the creditor (OPGC) and the liability was enforceable in a court of law. Hence, the amount was not assessable u/s.41(l) as decided by Apex Court in the case of (CIT vs. Sugauli Sugar Works Pvt. Ltd.(1999) 236 ITR 518 (SC) and by Delhi High Court in the case of CIT V. Shri Vardhman Overseas Ltd. (343 ITR 408). In view of above clarification, the amount of unilateral write back of principal amount of Rs. 50 lakhs of OPGC loan is not liable to be taxed." 4. The above explanation of the assessee was not found acceptable to the satisfaction of Assessing Officer and, therefore, in view of the provisions of section 41(l)(a) of the Act. Accordingly, he made addition of Rs. 50,00,000/- to the total income of the assessee and passed order....
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.... were provided for the said loan in earlier years up to the financial year 2002-03. Since then no interest was charged and there was no communication by OPGC for repayment of above loan. Considering the preliminary observation of A.G. audit the amount of loan along with interest provided on the above loan was unilaterally written back in the accounts of 2009-10 without any confirmation from OPGC. However, the amount of Rs. 50 lakhs written back towards loan was not offered to tax as the same was not in the nature of capital receipt nor taxable either under section 28(iv) or under section 41(1)." The said amount of cessation of liability in any assessment year will be chargeable to tax as the income of the a previous year. Assessee cou....
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....that any unilateral act by the assessee is also inclusive in the purview of section 41(1) of the IT Act 1961 and is within the meaning of that section to which the assessee admitted suo motu through its explanation as above. As observed from the explanation on written submission produced during the course of remand proceedings at SI No. 1.3 it is submitted that in the context of waiver of loan, taxability would depend upon the purpose of which the loan was taken. Also a few documents in shape of Xerox copies have been produced with the written submission filed by the appellant assessee during the course of appeal proceedings. Primafacie scrutiny of those documents it appears to be those relates to transaction of loan by the party with....
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....e application of section 41(1) of the Act. Sub-section 1 of section 41 provides as under: "Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the first-mentioned person) and subsequently during any previous year,- (a) the first-mentioned person has obtained-, whether in cash or in any other manner whatsoever, any amount in respect of such10 loss or expenditure13- or some benefit in respect of such trading liability13 by way of remission or cessation thereof13, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and ac....
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....allowance in respect of this amount of Rs. 50,00,000/- was allowed to the assessee in any earlier assessment year or years. On the facts of the case, the provisions of section 41(1) are found not applicable so far as the loan amount of Rs. 50,00,000/- is concerned. In view of this, the addition of Rs. 50,00,000/- is directed to be deleted. 7. Before us, ld D.R. submitted that the CIT(A) was not justified in deleting the addition due to cessation of loan liability and the Assessing Officer in the course of assessment proceedings has dealt on this issue of written back of OPGC loan where the assessee has disclosed these facts in the profit and loss account and was claimed exempt. The assessee filed explanation on 26.2.2013 and the Assessing....