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III. Useful Case Laws:
1. CIT Vs. M/s Xylon Holdings Pvt. Ltd., ITA No. 3704 of 2010, Dated: 13-09-2012, High court of Bombay
Issue:
Whether the benefit of cessation of liability to repay a loan liability is not taxable u/s. 41(1) of the Income Tax Act?
Held:
The case of the assessee therein was that the loan was a capital receipt and has not been claimed as deduction from the taxable income in the earlier years and would not come within the purview of Section 41(1) of the Act. However, this Court by placing reliance upon the decision of the Apex Court in the matter of CIT v. T.V. Sundaram Iyengar and Sons Ltd. 222 ITR 344 held that the loan was received by the assessee for carrying on its business and therefore, not a loan taken for the purchase of capital assets. Consequently, the decision of this Court in the matter of Mahindra and Mahindra Limited (supra) [261 ITR 501(Bom)] was distinguished as in the said case the loan was taken for the purchase of capital assets and not for trading activities as in the case of Solid Containers Limited (supra).
(Please click here for judgment)
2. CIT Vs. M/s Maruti Insurance Distribution Services Ltd., W.P.(C) 106/2012, Date of Pronouncement: 04.09.2012, High court of Delhi
Tribunal cannot recall its order under section 254(2) & substitute new order
The power to rectify an order u/s 254 (2) is extremely limited. It does not extend to correcting errors of law, or re-appreciating factual findings as that would amount to a review. The amendment of an order does not mean obliteration of the order originally passed and its substitution by a new order. The Tribunal’s order that it had not considered a decision in the assessee’s own case for an earlier year where the facts & circumstances were the same and that this was an “apparant mistake” cannot be sustained.
(Please click here for judgment)
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