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TMI Blog2016 (1) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of liability on transfer/amalgamation of company and assets and the CIT(A) after considering the entire fact available before him, the addition was correctly deleted. - Decided in favour of assessee. - ITA No.5379/Mum/2013 - - - Dated:- 13-1-2016 - SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER Revenue by : Shri Abani Kanta Nayak (DR) Assessee by : Shri Vasantiben Patel O R D E R PER PAWAN SINGH, JM: 1. This appeal is directed by the Revenue against the order dated 21.05.2013 passed by CIT(A)-21, Mumbai raising only one ground regarding the deletion of addition of ₹ 4,04,02,671/- made by Assessing Officer (AO) in its order dated 22.12.2009 on account of cessation of liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties and perused the material available on record. 7. The AO while making the addition has observed that the assessee in his Profit Loss A/c credited ₹ 4,04,87,771/- being balances written back . However, in the computation of income Waiver of Loan of ₹ 4,04,02,671/- is reduced from the net profit taxable u/s 28(iv) or 41(1) and the AO sought the details of receipt by way of waiver of loan along with documentary support. 8. The assessee explained before the AO that about the genesis of loan that Zyma Laboratory Ltd. And M/s Lovin Crae Product Pvt. Ltd was amalgamated w.e.f. 01.03.2004 in Zyma Laboratory Ltd and earlier to this amalgamation m/s Lovin Cre Ltd. By business transfer agreement 01.04.2004 acquired manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an which was assigned to Kotawal India Ltd and was entitled to recover an amount of ₹ 4,60,75,285/- from Zyma Laboratory Ltd. 10. The contention of assessee was not accepted by the AO and treated this amount as income chargeable to the tax was added to the business income. 11. The CIT(A) while dealing with the ground has observed that to satisfy the condition of section 41(1), three condition must be satisfied (i) the loan is for capital purpose or trading purpose, (ii) is there any deduction or allowance in the earlier year which accrues benefit in respect of loan, expenditure, or trading by way of remission of cessation (iii) whether there is a succession to business on the fact of the case and further observed that the exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid any interest to the Landmark Builder nor claim any interest and further concluded that neither the assessee claimed deduction in FY-2002-03 nor Orgo Pharma Chemical claimed as interest as deduction for FY-2005-06 2006-07 by M/s Orgo Pharma Chemicals and further concluded that if deduction is claimed by the assessee in the return of income then section 41(1) is not attracted. 12. The CIT(A) further concluded that M/s Orgo Pharma Chemicals entered into business transfer agreement in which certain liability and assets were transferred to M/s Lovin Care Pvt. Ltd. on 01.01.2004 for a consideration of ₹ 1,00,000/-. 13. While considering the various transactions in between Orgo Pharma till the assessee, the CIT(A) concluded as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as under: Succession implies that there is end of an entity carrying on the business, and its place has been taken by an entirely new entity to run in continuity and as a going concern, the same business. Substantial identity and continuity of the business must be preserved. The tests of change of ownership, integrity, identity and continuity of a business have to be satisfied before it can be said that a person succeeded to the business of another It is clear from the above decision also that the original concern will look the identity and need not file I.T. Return. As Orgo Pharma Chemicals is existing after the transfer of certain assets and liabilities, hence, the condition no.(iii) that there is succession in business is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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