TaxTMI 
TaxTMI 
2022 (10) TMI 678
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....7.03.2013 was issued to the assessee on the ground that there is an escapement of income. The assessee vide its letter dated 29.04.2013 requested to treat the original return filed as a return filed in lieu of the notice issued under section 148 of the Act. Thereafter, the Assessing Officer has completed the assessment under section 143(3) r.w.s. 147 of the Act dated 24.02.2014. 3. On verification of details of M/s. V.S. Net Ltd., the Assessing Officer has noted that as per agreement entered between the assessee company and M/s. V.S. Net Ltd., in clause 5 Return, sub clause 5.2, the interest amount to be paid on the principal amount was clearly defined and based on that Rs. 1.31 crore interest payable by Indus Cityscapes Construction Pvt. Ltd. to V.S. Net Ltd. was written off as bad and doubtful debts by M/s. V.S. Net Ltd., for the year ending 31.03.2008. The said interest amount was payable by the assessee company towards advances received from V.S. Net Limited for land purchase, etc. The transactions pertaining to this has been confirmed by M/s. V.S. Net Limited (Now known as Siva Industries and Holdings Limited) and they have confirmed vide their letter dated 27.01.2014 t....
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.... 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 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; or (b) the successor in business has obtained, whether in cash or in any other manner whatsoever, any amount in respect of which loss or expenditure was incurred by the first-mentioned person or some benefit in respect of the trading liability referred to in clause (a) by way of remission or cessation thereof, the amount obtained by the successor in business or the value of be....
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.... of clause (iv) of sub-section (1), [or clause (c) of sub-section (2B),] of section 35, read with clause (4) of section 43, is sold, without having been used for other purposes, and the proceeds of the sale together with the total amount of the deductions made under clause (i) [or, as the case may be, the amount of the deduction under clause (ia)] of sub-section (2), [or clause (c) of sub-section (2B),] of section 35 exceed the amount of the capital expenditure, the excess or the amount of the deductions so made, whichever is the less, shall be chargeable to income-tax as income of the business or profession of the previous year in which the sale took place. Explanation.--Where the moneys payable in respect of any asset referred to in this sub-section become due in a previous year in which the business is no longer in existence, the provisions of this sub-section shall apply as if the business is in existence in that previous year. (4) Where a deduction has been allowed in respect of a bad debt or part of debt under the provisions of clause (vii) of sub-section (1) of section 36, then, if the amount subsequently recovered on any such debt or part is greater than the difference ....
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....x under sub-section (1), sub-section (3), sub-section (4) or sub-section (4A)] in respect of that business or profession, any loss, not being a loss sustained in speculation business, which arose in that business or profession during the previous year in which it ceased to exist and which could not be set off against any other income of that previous year shall, so far as may be, be set off against the income chargeable to tax under the sub-sections aforesaid. [(6) References in sub-section (3) to any other provision of this Act which has been amended or omitted by the Direct Tax Laws (Amendment) Act, 1987 shall, notwithstanding such amendment or omission, be construed, for the purposes of that sub-section, as if such amendment or omission had not been made.] Thus the apparent written conditions above is not sustainable in the above discussed facts. Accordingly I confirm the action of the AO to bring to tax Rs. 1.31 crores u/s. 41(1) of the Act. The ground of appeal on the issue of facts is hereby dismissed." 5. On being aggrieved, the assessee carried the matter in appeal before the Tribunal. By referring to paper book page 46 to 51, the Ld. Counsel for the assessee has point....