Case Law Details
ITO Vs Schoeller Technologies India Pvt. Limited (ITAT Mumbai)
The assessee was making consistent losses for the last several years and therefore, the promoter company was supporting the assessee in continuing its survival. The sums payable to the promoter towards commission, knowhow fees and royalty are outstanding constantly for 2012-13 onwards. The accumulated losses of the company is ₹2.57 crores and therefore, the sum payable to the holding company remained unpaid. Part of the sum was received as loan and a sum of ₹3,01,66,005/- was on account of various expenditure incurred by the assessee in earlier years. The learned CIT (A) noted that the learned Assessing Officer did not have any evidence that above sum has become an income of the assessee by remission or cessation of the liability to pay to the holding company. He held that unless the liability for payment ceases, the amount could not have been taxed under Section 41(1) of the Act. He further relied upon several judicial precedents where, it has been held that non-payment of outstanding liability where the liability still exists, cannot be added under Section 41(1) of the Act. He noted that assessee is showing liability in his books of account and therefore, same exists. The transfer of sum of ₹33,23,957/- which has already been offered by the assessee cannot make the other outstanding liability as income of the assessee. On careful examination of section 41(1) of the Act, we also find that assessee has not obtained any amount in respect of the above liability outstanding and there is no remission of the liability. Unless, there is an evidence of remission or cessation of liability, provisions of Section 41(1) of the Act does not apply. In fact, in this case assessee has acknowledged the existence of liability in its balance sheet year to year, shown relationship with the creditor and reasons for non-payment. In view of this, we do not find any infirmity in the order of the learned CIT (A) in deleting the above addition. Accordingly, the order of the learned CIT (A) is confirmed. The appeal of the learned Assessing Officer is dismissed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. This appeal is filed by Income Tax Officer, 15(3), Mumbai, (the learned Assessing Officer) for A.Y. 2015-16 against the order passed by the Commissioner of Income-tax (Appeals)-24, Mumbai [the learned CIT (A)] in case of Schoeller Technologies India Pvt. Ltd (assessee), who has also filed cross objection.
2. In ITA No.2407/Mum/2019, the appeal is filed by the Income Tax Officer, Ward 15(3)(3), Mumbai (the learned Assessing Officer) raising following grounds of appeal:-
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