2016 (8) TMI 1464

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....in deleting the addition made u/s. 41(1) of Rs. 4,11,27,086/- without appreciating the fact that assessee was not able to produce confirmation for the said amount. 2. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) is right in deleting the addition of Rs. 21,19,41,871/- being 15% of the total expenses claimed, despite the fact that the assessee could not produce evidence to support the admissibility of these expenses u/s. 37(1) of the Income-tax Act, 1961, in spite of opportunities given. 3. The appellant prays that the order of the CIT(A) on the grounds be set aside and that of the Assessing Officer to be restored.   2. The facts in brief, are that the assessee is a Resident company w....

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....capital transactions and section 41(1) has no applicability to such transactions. Further, there is no cessation of unsecured loans and the same remain repayable and liability thereof has not ceased. The assessee relied on judgment of Supreme Court in the case of CIT Vs. Sugauli Sugar Works Pvt. Ltd. (1999) 236 ITR 518 wherein it was observed that unless there is a cessation of liability, income cannot be added as per the provisions of section 41(1) of the Act. To apply section 41(1), two things have to be established concurrently:- (i) the explicit remission of the liability as against the presumed or unilateral. (ii) the liability must have been incurred for expenses, which must have been debited to profit & loss account....

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.... 41(1) Where an allowance or deduction has been made in the assessment for any years 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 such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, 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 accordingly chargeable to Income-tax as the income of the previous year, whether the bu....