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TMI Blog2016 (9) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... f URMP(SPV) and if any cessation is to be considered in the hands of URMP. We are not in a position to uphold the argument of the ld.A.R as held by the Tribunal on earlier occasion. There is a remission of liability in favour of assessee company and the liability payable to the bank has been reduced to 43 crores and it has to be brought to tax in the hands of assessee only u/s.41(1) of the Act. Accordingly, the ground raised by the Revenue is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... consortium of banks is having a first and prior charge on all receivables of the assessee company as security for the loans and credit facilities extended to the assessee. As on the date of the tripartite agreement, the total of the receivables of the assessee was ₹ 93.45 crores. As against the above amount, the tripartite agreement limited its assignment to ₹ 89.86 crores. The differential amount of ₹ 3.59 crores is shown as receivables in the accounts of the assessee company. The exact nature of this amount, whether it subsists as recoverable or already included in the bad debts written off or is in the nature of income, etc. have not been examined by the Assessing Officer, if not discussed in the assessment order. The amount of receivables assigned to the Special Purpose Vehicle URMPL was ₹ 89.86 crores. It is stated in the tripartite agreement that the agreement was executed to crystallise the liabilities of the assessee company to the consortium of banks. In paragraph 3 of the tripartite agreement it is stated as below:- "3. The dues of the FIRST PART amounting to ₹ 89.05 crs to the THIRD to FOURTEENTH PARTS is hereby crystallized and fixed at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inds prima facie that certain relevant aspects of the assessment have not been examined by the assessing authority, which has made the assessment order erroneous and prejudicial to the interests of the Revenue, the Commissioner of Income-tax is within his competence to invoke section 263. 16. As far as the present case is concerned, the assessment order passed by the assessing authority is a very cryptic order where there is no discussion regarding certain vital issues arising from the assessment. 17. Therefore, in the facts and circumstances of the case, we uphold the revision order passed by the Commissioner of Income-tax." 3.2. Consequent to the order u/s.263 of the Act, the ld. Assessing Officer passed the assessment order dated 13.12.2011 u/s.143(3) r.w.s.263 of the Act observing that in clause-3 of page-5, the Tripartite agreement, there is a remission of liability to the tune of ₹ 46.05 crores and accordingly, AO brought into tax. Against this, the assessee carried the appeal before the Ld.CIT(A). 4. On appeal, the Ld.CIT(A) observed that the tripartite agreement dated 28.06.2006 among the assessee (FIRST PART), Unique Receivable Management Pvt.Ltd, the SPV (SECO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any material to prove that the agreement was not genuine. Hence, Ld.CIT(A) was of the opinion that the impugned sum cannot be added u/s.41(1). 4.1 Further the contention of the assessee was that the waiver was in the capital field since the loan from the banks were used for acquisition of capital assets which were given on hire or on lease to customers. This is confirmed by the fact that the hire purchase and leasing transactions were hypothecated against bank liability and both were transferred together to the SPV. In this regard, the Id.AR has relied on the decisions in the cases of lskraemeco Regent Ltd, Jindal Equipment and Leasing Services Ltd, Mahindra & Mahindra, Chetan Chemicals Ltd, MindTek India P Ltd, Elscope and Nectar Beverages P Ltd (supra). He has gone through the above decision and found that the ratio of the decision in the case of Iskraemeco Regent Ltd (supra) is applicable to the facts of the present case. The Hon'ble jurisdictional High Court in the above case found that the amount received and used for the purchase of capital asset could hardly constitute a trading receipt, so that the application of T.V.Sundaram lyengar & Sons Ltd's case (222 ITR 344) lack me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aragraph 3 of the tripartite agreement it is stated as below:- "3. The dues of the FIRST PART amounting to ₹ 89.05 crs to the THIRD to FOURTEENTH PARTS is hereby crystallized and fixed at ₹ 43 crores (with the application of interest to cease from 1st July 2005). Thereafter, the agreement speaks about the modalities of the payment of the sum of ₹ 43 crores by the Special Purpose Vehicle URMPL to the consortium of banks. Clause 7 of the tripartite agreement reads as below: '7. The Parties agree that on the SECOND PART paying the THIRD PART the aforesaid sum of ₹ 43 crores in terms of Clause 5 above and interest in terms of Clause 6 above, all dues, claims, demands and liabilities of the THIRD to FOURTEENTH PARTS against the SECOND PART shall cease and the same shall constitute a full and final settlement and absolute release of the SECOND PART from any obligation whatsoever to the THIRD TO FOURTEENTH PARTS and the THIRD to FOURTEENTH PARTS shall not be entitled to commence any legal proceedings against the SECOND PART either in the Debt recovery Tribunal or elsewhere". Further, ld.D.R submitted that from the above clause in the tripartite agreement, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and receivables willbe treated as Liabilities and receivables of URL from 1.10.2005. Clause 3: ICCL liability, in spite of transfer would be ₹ 43 Crores. Clause 4: Once trasfer is complete ICCL does not have any liability. Clause 5: URL shall pay ₹ 43 Crores to the Banks. Clause 6: URL to pass on further collections, after settling outside liabilities, realised from receivables to the banks. Clause 7: On payment of ₹ 43 Crores, Banks will not proceed to realize further amounts. But whatever is realized from the receivables shalL be passed on to the Banks. Hence the liability has not been waived or ceased. Clause 11 &12. ICCL shall selL receivables to URL and the consideration is the transfer of Bank liabilities. e. ICCL transferred all, its assets and liabilities to URL at Book Value. The same was refLected in the Books of URL and has been accepted by the Department. f. The order u/s 263 and the Assmnt order read with 263 dt 26.12.2011 has accepted the transfer of LiabiLity of ₹ 89 crores. g. URL has shown ₹ 89 Crores as Liability to Banks in its books. h. Total amount of ₹ 43 Crores were paid by URL to Banks till Aug 2009. i. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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