2019 (7) TMI 417

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....016 for the Assessment Year 2010-2011. 2. The revenue has filed this appeal raising the following substantial questions of law: " (i) Whether on the facts and in the circumstances of the case the order of the Tribunal erroneous in law and perverse on facts. (ii) Whether on the facts and in the circumstances of the case the order of the Tribunal was right in holding that the remission of the loan liability by availing the early repayment and discount scheme of the Government with respect to the deferred sales tax under Interest Free Sales Tax deferral scheme is not income under Section 28(iv) r.w. 41(1) of the Act, even though the assessee had collected a sum of Rs. 5,79,43,346/- as sales tax and had paid only an amount ....

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....d tax in one lumpsum at the discounted rate of 8%. The assessee availed the benefit under the said G.O., thereby the assessee received a rebate of Rs. 2,20,63,819/-. The Assessing Officer has opined that the assessee has received benefit, which would fall under Section 41(1) read with Section 28(iv) of the Act and therefore made the addition. 6. The assessee challenged the same by filing an appeal before the CIT(A), which was allowed by following the decision of the High Court of Karnataka in CIT Vs.Mcdowell & CO Ltd reported in 369 ITR 684 and the decision of the High Court of Bombay in the case of CIT Vs. Sulzar India Ltd reported in 369 ITR 717, wherein it was held that Section 41(1) of the Act was not attracted to such benefit on acc....

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.... CIT vs. Balkrishna Industries Ltd., reported in [2017] 88 taxmann.com 273 (SC). The Hon'ble Supreme Court approved the said decision of the Bombay High Court wherein it was held as follows:- "The argument of the revenue is not that the assessee having paid Rs. 3.37 crores has obtained for himself anything in terms of section 41(1), but the assessee is deemed to have received the sum of Rs. 4.14 crores, which is the difference between the original amount to be remitted with the payment made. The revenue terms this as deemed payment by the State to the assessee. The Tribunal has found that the first requirement of section 41(1) is that the allowance or deduction is made in respect of the loss, expenditure or a trading liability ....