TaxTMI 
TaxTMI 
2018 (3) TMI 1193
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....s, 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 explanation with written submission on 26.2.3013 as under: "During the construction period prior to 1990, OPGC had advanced some amount to IDCOL for supply of products/rendering of services by the subsidiary companies of IDCOL Group i.e. HIWL and IPEWL. After adjustment of advances against supplies and services, a sum of Rs. 50 lakhs was lying outstanding on the said loan. In anticipation of claim for repayment of loan by OPGC, interest totaling Rs. 56.16 lakhs were provided for the said loan in earlier years 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 confirm....
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....debited such amount from the net profit under the head "Written back OPGC Loan" thereafter, it is submitted by the assessee that:- "During the construction period to 1990, OPGC had advanced some amount to IDCOL for supply of products/rendering of services by the subsidiary companies of IDCOL Group, i.e. HIWL and IPEWL. After adjustment of demands against supplies and services, a sum of Rs. 50 lakhs was lying outstanding on the said loan. In anticipation of claim of repayment of loan by OPGC, interest totallying to Rs. 56.16 lakhs 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 lia....
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....ation, OPGC during the period 1999, 2000 to 2004. The explanation offered by the assessee in the rejoinder do not describe the details as claimed by it in the enclosures annexed with the rejoinder. The details of contents brought by the assessee in the post assessment proceedings are not verifiable in the light of the submission made by the assessee in the rejoinder. Also the documents appear to be older than for a period of 10-12 years ago. This is an additional evidence adduced by the assessee u/s.46A of IT Act, Assessee could not substantiate its claim through out the assessment proceedings and remand proceedings for exemption of its claim that such write off of loan amounting to Rs. 50,00,000/- is capital in nature or a term loan taken for acquisition of a capital asset, rather from its explanation produced during the course of assessment proceedings it was stated that 'during the construction period prior to 1990, OPGC had advanced some amount to IDCOL for supply of products/rendering of service. Hence, the issues raised by the assessee during remand appeal proceedings is an afterthought only for which the addition made by the AO is liable to sustained without granting any....
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.... the loan from OPGC which was taken long back. There is perhaps no dispute about this. The AO has not brought any materials on record to show that a deduction or 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 Officer having considered the explanation and the provisions of section 41(1) of the Act found that the assessee's explanations are without the satisfaction and the case laws relied are distinguishable as the assessee has written back the loan amount of Rs. 50,00,000/- and claimed the ....