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TMI Blog2024 (11) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... 28 (iv) of the Income Tax Act, 1961?" 3.1. The brief facts of the case are that in the financial year 2001-02, the respondent-assessee received a sum of Rs. 11,23,64,705/- from M/s. Marwar Hotels Private Limited which was classified as non-sundry creditors since financial year 2003-04. According to the assessee, the said amount was received against the project to be carried out but could not be implemented and the amount was not returned by the assessee due to financial constraints. 3.2. The Assessing Officer for the Assessment Year 2012-13 sought to invoke provisions of Section 41 (1) of the Act on the ground that there is no liability of the assessee to repay the amount and therefore, the assessee has been benefited by the advances received by it in the financial year 2001-02 and there was cessation of liability as the same has ceased to exist. In addition, the Assessing Officer also found that the amount of money received by the assessee from M/s. Marwar Hotels Private Limited was invested in acquiring the shares of the group company of the M/s. Marwar Hotels Private Limited and the assessee sold such shares to the group company at a loss, meaning thereby that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was excluded from the computation of income but nothing sort of that has taken place in the case of appellant. Since there was a specific event during the year i.e. writing back such amount in P & L Account which relieved the appellant from acknowledging the said liability in future, the same was treated as income of the appellant by the Apex Court. But in the appellant's case no such action of witting off such liability in the P & L Account for the year under consideration has taken place. On the contrary, the appellant as well as M/s. Manwar Hotels Limited has acknowledged the fact that the appellant was liable to pay such amount and was not relieved of such liability. In the case of appellant, no such event has token place during the year which relieved it from payment of such liability. Hence, the decision of Hon'ble Apex Court in the case of CIT Vs. T. V. Sundaram (supra) is not applicable on the facts of the case. 2.14. Even the provisions of section 28 (iv) are not applicable on the facts of the present case in view of the decision of Hon'ble ITAT, Ahmedabad in the case of Anurag Chemicis Pvt. Ltd (supra) as discussed in preceding para. The facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies of Marwar Hotels Ltd. During the F.Y. 2005-06 relevant to A.Y. 2006-07 the assessee stated to have incurred a loss of Rs.(-) 10,32,06,696/- on sale of its shares of 10623050. The assessee has not given any working of loss of Rs. (-) 10,32,06,696/- incurred on sale of shares in the statement of income for A.Y. 2006-07. The assessee is claiming such c/f. capital loss from year to year. The assessee again in the A.Y. 2009-10 shown a long term capital loss of Rs. (-) 54,46,623/- from sale of shares of group companies of Marwar Hotels Ltd. aggregating the total loss of Rs. (-) 10,86,53,319/- Again during the P.Y. relevant to A. Y. 2010-11 the assessee sold another lot of shares resulting into loss of Rs. (-) 2,38,87,943/-. In this way, the assessee has repaid more or less the same amount of Rs. 11,23,64,705/- received from Marwar Hotels Ltd. (as trade advance for certain project Lun of chares of group companies of Marwar Hotels Ltd. 9.1 From the above finding of the AO, it is transpired that even we assume that the assessee has adopted a colourable device for the transaction discussed above, but the question arises whether the assessee is the beneficiary of such a transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has reinvested the amount received as advance in the shares of the group companies of the said M/s. Marwar Hotels Private Limited which was later on sold at loss and such capital loss was never claimed as a set-off by the assessee. 5. In view of the above findings of fact, we are of the opinion that the provisions of Section 41 (1) read with Section 28 (iv) of the Act would not be applicable. 6. Learned Senior Standing Counsel Mr. Varun Patel for the appellant relied upon the decision of this Court in Gujtron Electronics Private Limited versus Income Tax Officer to submit that the facts of the said case are similar to the facts of the present case. However, on perusal of the Judgment of this Court in the said case, it appears that the facts in the said case refers to the amount of Rs. 500/- collected by the assessee from the customer by sale of coupons which was shown as advance as part of the scheme and the same was never returned to the customers. This Court in the facts of the said case held as under : "10. As is bound to happen, in such a scheme requiring continuous chain reactions, the chain would break at some stage. The amount of Rs. 7.87 crores repres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with respect to the claim or with respect to the deposited amounts" 7. On perusal of the above findings, it is clear that in the facts of the case before the Court the amount was invested by the assessee earning interest and used such interest for his purpose. Thus, it was a matter of fact that the assessee in the said case enjoyed the amount which remained credited in the books of accounts and was never intended to be returned to the customers from whom it was collected, whereas, in the facts of the present case, there is a concurrent findings of CIT (Appeals) and the Tribunal to the effect that the respondent-assessee never enjoyed the benefit of the advance which was received by it in the financial year 2001-02 and therefore, both the authorities have rightly held that there is no cessation of any liability. It was rightly observed by the Tribunal that at the most it can be alleged that the transaction is one of conduits and not the party who allegedly derived benefit. 8. On the other hand, learned advocate Mr. B.S. Soparkar for the respondent-assessee referred to and relied upon the decision of this Court in case of The Principal Commissioner of Income Tax-3 Ahmedabad Versus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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