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TMI Blog2022 (10) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the assessee has not claimed any deduction in earlier years in respect of loss or expenditure or trading liability. Assessing Officer invoked the section 41(1) of the Act presuming that the assessee has got benefit is not correct. We find that section 41(1) of the Act as no application to the facts of the assessee's case. Without considering the provision of section 41(1) of the Act, in sprit, the Ld. CIT(A) has simply confirmed the order of the Assessing Officer. Accordingly, we reverse the order passed by the Ld. CIT(A) on this issue and allow the ground raised by the assessee. - I.T.A. No. 1226/Chny/2018 - - - Dated:- 16-9-2022 - Shri V. Durga Rao , Judicial Member And Shri G. Manjunatha , Accountant Member Appellant by : Shri T. Banusekar , CA Respondent by : Shri D. Hema Bhupal , JCIT ORDER PER V. DURGA RAO , JUDICIAL MEMBER : The appeal filed by the assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals)-13, Chennai dated 06.12.2017 relevant to the assessment year 2008-09. 2. Facts are, in brief, that the assessee company is carrying real estate, construction and related activities, filed return of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the income of the assessee. 4. On appeal, the Ld. CIT(A) confirmed the order of the Assessing Officer by observing as under: I have carefully considered the appellant's above contentions and also gone through the case laws relied by the assessee supra. The same are found clearly distinguishable on facts than that of the facts of the assessee's case. The AO has verified the books of accounts of the M/s. VS Net Limited and also relied on the agreement entered between the assessee company and M/s. VS Net Ltd., in clause 5 Return, sub clause 5.2 wherein, it is clearly mentioned about the interest payment of Rs. 1.31 crore interest payable by Indus Cityscapes Constructions Pvt. Ltd. to VS Net Ltd., moreover, it is a finding fact of the AO that M/s. VS Net Ltd. has written off Rs. 1.31 crore interest payable by Indus Cityscapes Constructions Pvt. Ltd. in their books of accounts. The confirmation factor is also brought on record by the AO for which the AO has obtained confirmation from M/s. VS Net Ltd. (now known as Siva Industries and Holdings Limited) by way of confirmation letter dated 27.01.2014. Thus, it is clear cut factual position where interest amount of Rs. 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amalgamated company; (ii) where the first-mentioned person is succeeded by any other person in that business or profession, the other person; (iii) where a firm carrying on a business or profession is succeeded by another firm, the other firm;] (iv) where there has been a demerger, the resulting company.] [(2) Where any building, machinery, plant or furniture,- (a) which is owned by the assessee; (b) in respect of which depreciation is claimed under clause (i) of sub-section (1) of section 32; and (c) which was or has been used for the purposes of business, is sold, discarded, demolished or destroyed and the moneys payable in respect of such building, machinery, plant or furniture, as the case may be, together with the amount of scrap value, if any, exceeds the written down value, so much of the excess as does not exceed the difference between the actual cost and the written down value shall be chargeable to income-tax as income of the business of the previous year in which the moneys payable for the building, machinery, plant or furniture became due. Explanation.-Where the moneys payable in respect of the building, machinery, plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with the proviso to clause (1) of section 43, taken to be twenty-five thousand rupees, the moneys payable in respect of such motor car shall be taken to be a sum which bears to the amount for which the motor car is sold or, as the case may be, the amount of any insurance, salvage or compensation moneys payable in respect thereof (including the amount of scrap value, if any) the same proportion as the amount of twenty-five thousand rupees bears to the actual cost of the motor car to the assessee as it would have been computed before applying the said proviso; (2) sold includes a transfer by way of exchange or a compulsory acquisition under any law for the time being in force but does not include a transfer, in a scheme of amalgamation, of any asset by the amalgamating company to the amalgamated company where the amalgamated company is an Indian company.] (4A) Where a deduction has been allowed in respect of any special reserve created and maintained under clause (viii) of sub-section (1) of section 36, any amount subsequently withdrawn from such special reserve shall be deemed to be the profits and gains of business or profession and accordingly be chargea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y have written off the said amount of R. 1.31 crores interest receivable from the assessee for the year ending 31.03.2008 as bad debt. On the basis of that, the Assessing Officer came to a conclusion that the provision of section 41(1) of the Act has to be applied to the assessee. It is not the case of Department that the assessee has debited the said interest amount in the profit and loss account or charged to profit and loss account. The only case of the Assessing Officer is that because M/s. V.S. Net Ltd., to whom the assessee has to pay the interest amount has written off the amount as bad debt, thereby the provision of section 41(1) of the Act as to be applied automatically. 6.1. In this case, the Assessing Officer has invoked section 41(1) of the Act on the ground that the other party M/s. V.S. Net Ltd. has written off the interest amount as bad debt and therefore, section 41(1) of the Act has to be applied in assessee's case. As per section 41(1) of the Act, in earlier year, the assessee was not allowed deduction in respect of the loss or expenditure revenue or capital for trading liability incurred by the assessee. In the present case, the assessee has not claimed an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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