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TMI Blog2022 (10) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case. 2.1 The learned CIT(A) erred in deleting the disallowance of Rs. 22,36,02,749/- on account of remission of liability u/s. 41(1) on three counts: (i) The transaction between two share holders cannot in anyway affect the capital base of a company nor it can give rise to a remission of liability by a shareholder with regard to the assessee company. (ii) The aggregate value of the liability did not change only the value of the liability got regrouped under some other heads. (iii) M/s. Kasturi & Sons Ltd. has entered the incurred loss in books of account only as a provision for a loss on sale of investments and has not claimed any long term capital loss in its I.T. return for the a-y 2005-06. 2.2. Having regard to the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount cannot be assessed u/s. 41(1) of the I.T. Act, in the hands of the assessee company. 3.1. The learned CIT(A) erred In deleting the addition of Rs. 25 crores made towards unexplained cash credit u/s. 68 of the I.T. Act, on the ground that the source being from the bank account of M/s. Cheran Holdings Pvt. Ltd.(CHPL) through a cashier's cheque to the bank account of the assessee company, the source of the cash credit stood explained. 3.2. The learned CIT(A) failed to appreciate the decision of the Hon'ble Kerala High court in the case of ITO v. Diza Holdings P. Ltd. (225 ITR 573), wherein it had been held that the mere fact that payment was received by way of account payee cheque Is not conclusive for explaining cash credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts part of agreement and hence, M/s. Kasturi & Sons Ltd. has to pay guarantors, whose liabilities were agreed to be settled by M/s. KCP Ltd. Since, M/s. KCP Ltd. failed to perform its part of agreement, M/s. Kasturi & Sons Ltd., in terms of agreement invoked arbitration clause. The arbitral award was passed in favour of M/s. Kasturi & Sons Ltd., whereby M/s. Kasturi & Sons Ltd. took over the assessee company. In the meanwhile, the assessee company had certain financial commitments on account of borrowings effected by it and demands for repayment thereof and it had sought certain financial assistance and accordingly, the company has received a sum of Rs. 25 crores by way of loan from a company known as M/s. Cheran Holdings Pvt. Ltd. M/s. Che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer it back to Canara Bank in terms of court order. The learned AR further referring to various documents submitted that source of money has been explained and also genuineness of payment is not in doubt, because money has been transferred from bank account to the assessee. Further, so called money received from M/s. Cheran Holdings Pvt. Ltd. is not belonged to the assessee and thus, same cannot be added in the hands of the assessee. The learned CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer and their order should be upheld. 5. The learned DR, on the other hand, submitted that the Assessing Officer has brought out clear facts to the effect that the assessee has derived benefit out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k, Chennai. Further, Canara Bank has filed Civil Appeal before the Hon'ble Delhi High Court and the Hon'ble High Court has passed order on 18.11.2005 and directed all parties, including income-tax department to remit amount received from M/s. Data Access India Ltd. to Canara Bank account. From the above, it is very clear that amount received by the assessee from M/s. Cheran Holdings Pvt. Ltd. does not belong to the assessee, in view of the specific order of the Hon'ble Delhi High Court and thus, it cannot be said that it is unexplained income of the assessee. Further, from the above details it is very clear that source of money has been explained by the assessee, including identity of the creditors and further said amount has be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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