TaxTMI 
TaxTMI 
TaxTMI 
2021 (8) TMI 135
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.... tribunal' for short). The subject matter of the appeal pertains to the Assessment year 2007-08. The appeal was admitted by a bench of this Court on the following substantial questions of law: (i) Whether the Tribunal was correct in holding that the assessee has not gained any benefit from the order of the government without appreciating the fact that the transactions of the assessee with the government and that with M/s. KPCL are on different accounts as one is on capital account and the other is on trading account and the debt due from the government is a capital account which cannot be set off against the trading liability? (ii) Whether the Tribunal was correct in allowing the assessee's appeal without holding that the cessa....
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....f Karnataka paid a sum of Rs. 120 Crores each to the assessee and to Karnataka Power Corporation Limited and directed the Corporation to write off the remaining dues. The liability of the assessee was discharged to the extent of Rs. 240 Crores. The assessee did not offer the aforesaid income to tax as the said amount was claimed as an expenditure towards purchase of power and debited to the profit and loss account. The Assessing Officer by an order dated 18.03.2013 invoked provisions of Section 41(1) of the Act and treated as sum of Rs. 240 Crores as income of the assessee and the same was brought to tax. The assessee thereupon filed an appeal. The Commissioner of Income Tax (Appeals) by an order dated 22.07.2013 dismissed the appeal. The a....
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.... AND MAHINDRA LTD.', (2018) 93 TAXMANN.COM 32 (SC), 'COMMISSIONEROF INCOME-TAX, GULBARGA VS. PRAGATHI GRAMINA BANK', (2018) 91 TAXMANN.COM 343 (KAR), 'COMMISSIONER OF INCOME-TAX, LTU VS. COMPAQ ELECTRIC LTD.', (2011) 16 TAXMANN.COM 385, 'COMMISSIONER OF INCOME-TAX VS. GUGAULI SUGAR WORKS (P.) LTD', (1999) 102 TAXMAN 713 (SC). 5. On the other hand, learned counsel for the assessee submitted that tribunal on the basis of material available on record has recorded a finding that provisions of Section 41(1) of the Act is not applicable to the case of the assessee as no real or notional benefit has been obtained by the assessee. It is also argued that in order to attract the applicability of Section 41(1) of the Act ....
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.... 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 that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not; 7. The conditions precedent for invocation of Section 41(1) of the Act can be summarized as follows: (i) an allowance or d....
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....ng Officer by an order dated 21.12.2020 passed in respect of subsequent Assessment Year 2008-09 has held as follows: The other important fact that needs to be noticed is that as a part of the reimbursement, the assessee received Rs. 120 Crores from the Government. This amount is not offered to tax as a revenue receipt. Thus when the receipt is not treated as revenue in nature, the corresponding loss should also be given the same treatment. There cannot be two yardsticks to measure two parts of the same transactions. In addition to the amount received from the Government, there was also remission of the assessee's liability to KPCL totaling to Rs. 240 Crores - by way of payment by Government as well as balance being written off by t....