TaxTMI 
TaxTMI 
2023 (5) TMI 1366
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....th the years relates to deletion/ addition made by the AO, towards cessation of liability u/s. 41 (1) of the Act, for sums amounting to Rs. 7,72,42,014/- in AY: 2013-14 & Rs. 9,24,00,000/- in AY: 2014-15. 3. The facts in briefs for the A.Y. 2013-14 are that, Assessee had taken loan from three banks namely, Axis Bank, IDBI Bank and Saraswat Co-Operative Bank for working capital requirement during the earlier years. These loans were post shipment credit loan, which was sanctioned in the year 2008 and was reflected in the balance sheet under the head 'secured loan'. The interest paid on this loan was debited to the profit and loss account in the earlier years. Due to financial crisis and huge business losses and non realization of exports pro....
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....ssee. 6. The Ld. CIT(A) held that the loan amount taken by the Assessee, does not given rise to any sale or purchase of any goods albeit it will enable to assessee to have buffer amount in case of any exigencies and such amount can be used for anything and not only for the purpose of purchasing of sailing goods. He further held that, Hon'ble Supreme Court in the case of Mahindra and Mahindra Ltd., reported in 2018 93 Taxmann 32, clearly clinches the issue in the favour of the assessee and also quoted the relevant paragraphs of the said judgement. He also referred to the decision of PCIT Vs. M/s. Gujarat State Financial Corporation SLP No. 272/221 order dated 19 Feb, 2021 and held that, addition cannot made u/s. 41(1)(a) for u/s. 21 of the ....
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....d down by the Hon'ble Supreme Court in the said judgment reads as under: 10. The term "loan" generally refers to borrowing something, especially a sum of cash that is to be paid back along with the interest decided mutually by the parties. In other terms, the debtor is under a liability to pay back the principal amount along with the agreed rate of interest within a stipulated time. 11. It is a well-settled principle that creditor or his successor may exercise their "Right of Waiver" unilaterally to absolve the debtor from his liability to repay. After such exercise, the debtor is deemed to be absolved from the liability of repayment of loan subject to the conditions of waiver. The waiver may be a partly waiver ie., waiver of part of th....
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...., the very first condition of Section 28 (iv) of the IT Act which says any benefit or perquisite arising from the business shall be in the form of benefit or perquisite other than in the shape of money, is not satisfied in the present case. Hence, in our view, in no circumstances, it can be said that the amount of Rs. 57,74,064 can be taxed under the provisions of Section 28 (iv) of the IT Act. 14. Another important issue which arises is the applicability of the Section 41 (1) of the IT Act. The said provision is re-produced as under: "41 Profits chargeable to tax (1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter ref....
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....% per annum to the KJC as per the contract but the assessee never claimed deduction for payment of interest under Section 36 (1) (iii) of the IT Act. In the case at hand, learned CIT (A) relied upon Section 41 (1) of the IT Act and held that the Respondent had received amortization benefit. Amortization is an accounting term that refers to the process of allocating the cost of an asset over a period of time, hence, it is nothing else than depreciation. Depreciation is a reduction in the value of an asset over time, in particular, to wear and tear. Therefore, the deduction claimed by the Respondent in previous assessment years was due to the deprecation of the machine and not on the interest paid by it. 16. Moreover, the purchase effected ....
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....any year, in respect of loss, expenditure or trading liability incurred by the Assessee and then subsequently, if the creditor remits or waives any such liability then assessee liable to pay tax u/s. 41 of the Act. Objective behind this section is to ensure that assessee does not get way with the double benefit. Here in this case the loan taken by the assessee was neither an expenditure nor trading liability and therefore waiver of such loan which otherwise was capital in nature, the provision of section 41 (1) cannot be invoked. Further, as held by the Hon'ble by the Supreme Court, section 28 (iv) also does not apply, as benefit on waiver of loan was not in the kind of money, i.e., cash receipt. Thus, the Ld. CIT (A) has rightly followed t....