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TMI Blog2024 (4) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... ed". Facts 3. Briefly stated facts of the present case are that the assessee filed returns of loss beyond limitation prescribed under Section 139(1)/139(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act, 1961) for the assessment years 1991-92, 1992-93 and 1993-94. Section 143(3) provides that if any person who sustained a loss in any previous year under the head 'profits and gains of business or profession' or under the head 'capital gains' claims that the loss or any part thereof should be carried forward under Section 72[1] or Section 73[2] or Section 74[1]/[3] or Section 74A[3], he may furnish within the time allowed under sub-Section (1) return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed. Undisputably, the assessee has not filed return of loss as prescribed. The return showing loss was filed by him much beyond limitation. For the assessment year 1991-92 an intimation under Section 143(1)(a) of the Act, 1961 was sent by the assessing officer to the assessee wherein assessing officer has clearly written that 'as the return was filed late as such loss will not be allowed to carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability of the bank shall not fall under Section 41(1) of the Act, 1961 and hence the addition made by the ITAT is arbitrary and illegal. 6. Learned Counsel for the respondents supports the impugned order of the ITAT. Discussion and Findings 7. We have carefully considered the submissions of learned counsel for the parties and perused the paper books. 8. Learned counsel for the parties have not disputed the facts as aforenoted. 9. The CIT(A) while allowing the appeal of the appellant assessee has recorded the following findings on the issue in question :- "6. Decision on Grounds No. 2 & 3 I have gone through the submission of A/R of the appellant and also gone through the assessment order. The Ld. A/R of the appellant filed a coy of the order u/s 154 dated 15.01.1999 and copy of the assessment order u/s 143(3) dated 29.03.1995 in respect of Asstt. Year 1992-93 and intimation u/s 143(1) (a) for Asstt. Year 1991-92 wherein A.O. has written that, as return was filed late as such loss will not be allowed to be carried forward. The Ld. A/R of the appellant drew my attention to the chart which was at Paper Book page 15 and stated that no benefit by way of carry forward of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed an allowance or deduction in any assessment year in respect of loss, expenditure or trading liability. After considering the Paper Book filed specially page 24 for the quantum of Bank interest where the A/R of the appellant referred to the chart of loss not to be carry forward of the 3 years i.e., A.Y. 1991-92, 1992-93 & 1993-94 as the returns were filed beyond due dates. From the records I find that the amount of loss which was on account of bank interest was a sum of Rs.23,52,987/- only. I have also considered the written submissions and the case laws relied upon by the Ld. A/R of the appellant. I direct the AO not to add u/s 41(1) a sum of Rs.23,52,984/- instead of the claim of the appellant in the Grounds of Appeal of Rs.29,31,698/-. Accordingly, round nos. 2 & 3 is allowed." 10. While setting aside the detailed order of the CIT(A), the only discussion which the Tribunal has made is in paragraphs 7, 8 and 9, are reproduced below :- "7. On the other hand, ld. Counsel on behalf of assessee has submitted that though it is a fact assessee has debited the interest in all the preceding three assessment years and the fact is that assessee is running in losses and assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner whatsoever, any amount in respect of which loss or expenditure was incurred by the first-mentioned person or some benefit in respect of the trading liability referred to in clause (a) by way of remission or cessation thereof, the amount obtained by the successor in business or the value of benefit accruing to the successor in business shall be deemed to be profits and gains of the business or profession, and accordingly chargeable to income-tax as the income of that previous year. [Explanation 1.- For the purposes of this sub-section, the expression "loss or expenditure or some benefit in respect of any such trading liability by way of remission or cessation thereof" shall include the remission or cessation of any liability by a unilateral act by the first mentioned person under clause (a) or the successor in business under clause (b) of that sub-section by way of writing off such liability in his accounts.] [Explanation 2].- For the purposes of this sub-section, "successor in business" means, - (i) where there has been an amalgamation of a company with another company, the amalgamated company; (ii) where the first-mentioned person is succeeded by any other pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o application inasmuch as there will be no question of neutralising the benefit obtained by the assessee by way of deduction made from income in the assessment. But, if the allowance or deduction has been made in the assessment year in respect of loss, expenditure or trading liability incurred by the assessee and assessee has obtained any amount or some benefit in respect thereof in subsequent year, then the amount so obtained shall be deemed to be the profit and gains of business or profession and accordingly chargeable to income tax as the income of that previous year in which the benefit has been obtained. Thus, the object and purpose of Section 41(1) of the Act, 1961 is to ensure that an assessee does not get away with a double benefit once by way of deduction and another by not being taxed on the benefit received by him in the later year; vide Commissioner vs. Mahindra And Mahindra (2018)16 SCC 79 (Para 18). 14. Having explained the provisions of Section 41(1)(a) of the Act 1961, as above, we turn to the facts of the present case. It is undisputed that in the assessment years 1991-92, 1992-93 and 1993-94, the assessee filed return disclosing loss on account of accrued bank i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied as the appellant assessee has neither subsequently obtained any amount in respect of the bank interest debited in his books of account in the A.Y. 1991-92, 1992-93 and 1993-94 nor waiver of interest on bank loan in the A.Y. 2003-04 is remission or cessation of a trading liability. The view being taken by us is also supported by the law laid down by Hon'ble Supreme Court in Commissioner of Income Tax-6, Mumbai vs. Balkrishna Industries Ltd. (2018)15 SCC 608 (Para 9&10), Polyflex (India) Pvt. Ltd., Bangalore vs. Commissioner of Income Tax, Karnataka (2002) 7 SCC 188 (Para 5&9) and Nector Beverages Pvt. Ltd. vs. Deputy Commissioner of Income Tax (2009)15 SCC 374 (Para 17). 17. In Commissioner vs. Mahindra And Mahindra Ltd. (2018)16 SCC 79 (Para 18&19) Hon'ble Supreme Court explained Section 41(1) of the Act, 1961 and held as under :- "18. On a perusal of the said provision, it is evident that it is a sine qua non that there should be an allowance or deduction claimed by the assessee in any assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee. Then, subsequently, during any previous year, if the creditor remits or waives any suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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