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TMI Blog2012 (12) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer under Section 28(iv) of the Act on account of write back of share application money? 2. Whether in the facts of the case the ITAT fell into error in deleting the addition of Rs. 45,41,542/- made by the Assessing Officer under Section 41(1) of the Act on account of write back of loan?" 2. The assessee is a subsidiary of a company in USA. It received share application money from its holding company in the earlier years to the extent of Rs. 1,32,88,530/-. This was partly in cash and partly in kind in the form of capital goods. As on 31.01.2006, balance in the share application money on account of Rs. 1,32,88,530.08. The assessee had also imported consumable in the earlier years in respect of which the outstanding liability in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and gains of a business or profession, in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee and subsequently, during any previous year the assessee had 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. Therefore, in order to apply the provisions of section 41(1) of the IT Act conditions mentioned above should cumulatively exist and that too in respect of the trading liability. This view is supported by the decision of the Hon'ble Supreme Court in the case of Polyflex (India) (P) Ltd. (257 ITR 343). From the facts of the case it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court and Supreme Court is not warranted. It is emphasised that the amount received towards share application money and more particularly the outstanding liability towards capital goods imported which was written back amounted to income which had to be taxed. The learned counsel placed reliance on the Supreme Court in Sundaram Iyengar & Sons Ltd. v. CIT, (1996) 222 ITR 344. 5. Learned counsel for the assessee on the other hand contended that the principles applicable in the present case were correctly applied by the Tribunal. He relied upon the judgment in Logitronics Pvt. Ltd. v. CIT, (2011) 333 ITR 386 (Del.) and Rollatainers Ltd. v. CIT, (2011) 339 ITR 54 (Del.). It was submitted that the nature and character of the receipt, which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court in CIT v. Ponni Sugar and Chemicals Ltd., (2008) 306 ITR 392 wherein it was held as follows: - "11. We have examined in this case the 1980 and 1987 Schemes. Essentially all the four schemes are similar except in the matter of details. Four factors exist in the said Schemes, which are as follows: - (i) Benefit of the incentive subsidy was available only to new units and to substantially expanded units, not to supplement the trade receipts. (ii) The minimum investment specified was Rs. 4 crores for new units and Rs. 2 crores for expansion units. (iii) Increase in the free sale sugar quota depended upon increase in the production capacity. In other words, the extent of the increase of free sale sugar quota depended upon the increase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nerate some capital assets. As mentioned above, the assessee is an investment company mainly into the business of purchase and sale of shares. It is also engaged into taking business loans and further financing done to the parties." 9. Having regard to the facts in that case the Court held that the assessee's appeal was without merit since even originally that amount was received for trading purpose. 10. In the present case the amounts were never received towards trading purposes. The share application amount was treated as a capital receipt; and likewise the amount of Rs. 45,41,542/- was shown as liability towards purchase of capital assets. Having regard to the law declared in HHEC, consequently it never changed its character when it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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