TaxTMI 
TaxTMI 
TaxTMI 
2022 (11) TMI 1133
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....in the instant appeal : 1. " On the facts and in the circumstances of the case and in law the Ld. CIT(Appeals) has erred in holding that the reopening of the assessment within the meaning of section 147 of the Act is not within the ambit of law. 2. On the facts and in the circumstances of the case and in law the Ld.CIT(Appeals) has erred in so holding ignoring the fact that the notice u/s 148 was issued within 4 years of the end of the assessment year and therefore the first proviso to section 147 does not apply in as much and truly all material facts necessary for the assessment is not a precondition for issue of such notice u/s 148. 3. On the facts and circumstances of the case and in law, the Ld.CIT(Appeals) erred in deleting the a....
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....ver of loan by the banks to the tune of Rs.5,79,61,882/- amounting cessation of liability only u/s. 41(1) of the Act. 5.1. Both the learned representatives referred to the said reasons of reopening which are hardly found to be sustainable in law. We make it clear that hon'ble apex court landmark decision in Sugauli Sugar Works P. Ltd. vs. Union of India [1999] 236 ITR 518 (SC) had settled the law that there has to be an actual cessation of liability in assessee's books so as to attract Section 41(1) of the Act which applies in case the same have been claimed as an expenditure or liability, as the case, may be, in preceding years. There has to be a clear cut live nexus to be proved at the Revenue's behest between the expenditure or liabilit....
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....ellant." 6. Learned DR at this stage took us to the CIT(A)'s detailed discussion in paragraphs 7.1 to 7.3 and vehemently argued that the provisions of section 41(1) duly get satisfied in facts of the instant case as follows : " 7.1. The assessee is a private limited company engaged in the business of manufacturing of TOR steel, wire, rod, angle and other re-rolled products. The company was declared sick under the Sick Industrial Companies Act, 1985. Therefore, the assessee company applied for the reconstruction and rehabilitation before the 'Board for Industrial and Financial Reconstruction (BIFR)'. In the course of rehabilitation, the management has made one time settlement with three banks/financial institutions viz., IDBI, IFC....
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....ffered by the company. Therefore, according to the appellant, the loan amount has become NPA in the year 1998 and thereafter the company was declared as sick industrial company and matter was referred to BIFR. The appellant has contended that the loan obtained from the banks and the financial institutions was utilized for acquisition of capital assets. The appellant in this regard has drawn the attention to the balance sheet of the earlier period of the company explaining the purpose and utilization of the loan obtained from the banks and the financial institutions. The AR has explained to the AO that the company has under taken the expansion cum modernization programme in the year 1995-96 with the capital investment planning of more than R....
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....ment of acquisition of plant & machinery on which no term loans were taken. Therefore, under such situation the company had utilized the amount available in the working capital facility of SBI for investment in margin money or capital assess purchased on loan as well as for acquisition of capital assets. This fact is verifiable from the audited financial statements and gross block of assets during the expansion period from F.Y. 1993 to F.Y. 1998. On perusal of the financial statements and balance sheet it is seen that the total purchases and investment in capital assets during the period 1993 to 1998 is around Rs.23 crores and the term loan obtained for investment in capital asset is approximately Rs.10 crores only. Thus, the appellant has ....
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....l found that the "Loan was sanctioned for working capital/ for acquisition". However, the same was utilized for acquisition of capital assets. The Tribunal had held that the amount having been utilized for capital assets, the remission of loan subsequently is a capital receipt." 7. We find no merit in the Revenue's instant arguments once there is no finding of fact at all; either recorded by the Assessing Officer or CIT(A), that any of the assessee's expenditure or liabilities claimed as revenue items in earlier assessment years, have undergone cessation or remission as the case may be, in the relevant previous year. We, thus, reject Revenue's contentions both on validity of reopening as well as on merits so far as this first and foremost ....