Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram
Income Tax - Highlights / Catch Notes

Home Highlights November 2024 Year 2024 This

The High Court held that the provisions of Section 41(1) read ...


Advance Amount not a Cessation of Liability when Reinvested in Group Cos, Sold at Loss.

Case Laws     Income Tax

November 5, 2024

The High Court held that the provisions of Section 41(1) read with Section 28(iv) of the Income Tax Act would not be applicable in this case. The assessee had received advances against a project that was never implemented, and the amount was not returned due to financial constraints. The Assessing Officer treated it as a cessation of liability, but the CIT(Appeals) and Tribunal found that the assessee did not derive any benefit or enjoy the money received as an advance. The assessee had reinvested the amount in shares of group companies, which were later sold at a loss, and the capital loss was not claimed as a set-off. The concurrent findings of fact by the lower authorities were accepted, and it was held that no benefit was derived from the transactions, thus negating the applicability of the relevant provisions.

View Source

 


 

You may also like:

  1. Sections 132B, 140A, 153A and 234B of the Income Tax Act, 1961 were analyzed regarding adjustment of seized cash against tax liability. The appellants claimed that cash...

  2. Dishonour of cheque - vicarious liability - liability of group companies - liability common Directors of the group, namely, Right Choice Group of Companies - Lifting of...

  3. Undisclosed income - since the advances made to boat owners was subject to tax out of which fish was supplied and Same was sold and the sale proceeds was shown as...

  4. Interest free advances given by the assessee to its group concerns - the assessee and its group concerns were paying the taxes at the maximum marginal rate as evident...

  5. Revision u/s 263 by CIT-A - AO’s order is not erroneous and prejudicial to the interest of revenue since mark to market loss incurred by Company on revaluation of...

  6. Characterization of income - Capital or revenue receipt - Section 41(1) of the IT Act particularly deals with the remission of trading liability whereas in that case,...

  7. Additions u/s 41(1) for cessation of liability - simply because the liability is outstanding for quite some years the liability does not seize to exist - mere entry in...

  8. Cessation of liability u/s 41(1) - Incomplete project - Assessee has received trade advance for sale of certain flats to prospective buyers which were ultimately not...

  9. Cessation of liability u/s 41(1) - As per the explanation, the remission or cessation of any liability by a unilateral Act, is covered u/s.41(1) - additions confirmed - AT

  10. Additions against Cessation of liability u/s.41(1) - there was nothing on record to show that there was any remission or cessation of such liability. Under the...

  11. Addition u/s 41 - remission or cessation of liability - when the software library was capitalized, it cannot be said that any benefit or remission or cessation of...

  12. Addition u/s 41(1) on account of cessation of liability – there could be no cessation of liability solely on the ground that it is over three years old - AT

  13. Additions u/s 41(1) - There cannot be cessation of liability twice - Therefore, when as per Explanation (1) there would be cessation of liability in the FY 2012-13 i.e....

  14. Cessation of trading liability U/s 41(1)(a) - Outstanding of creditors even for more than three years cannot be considered as sufficient evidence of cessation of...

  15. Addition on cessation of liability - Amount of advance received for sale of property - the amount of advance received should be reduced from the cost of acquisition of asset. - AT

 

Quick Updates:Latest Updates