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Judgment
CM APPL 9725/2014(for condonation of delay in refiling the appeal) and ITA No. 245 of 2014
This appeal under Section 260A of the Income Tax Act, 1961 (''Act'') is directed against an order dated 31st October 2012 passed by the Income Tax Appellate Tribunal (''ITAT'') in ITA No. 2414/Del/2011 for the Assessment Year (''AY'') 2005-06.
At the outset, the Court notes that there is delay of 320 days in re-filing the appeal after removal of defects. The explanation for the delay is that there was change of counsel. The Court finds the said explanation to be wholly unsatisfactory. Nevertheless, the appeal has also been examined on merits.
The principal question was whether the conversion of liabilities of the Assessee into equity share capital at a premium resulted in any benefit to the Assessee within the meaning of Section 28 (iv) or Section 41(1) (a) of the Act? The finding returned concurrently by both the CIT (A) and the ITAT is that the conversion of loans into capital did not result in any benefit to the Assessee and that the nature of the liability essentially remained the same. The Court concurs with the said view. Indeed there was no cessation of liability on account of the allotment of shares in favour of the creditors. It has rightly been held by the ITAT that the decision in CIT v. T.V. Sundram Iyengar & Sons 222 ITR 354 has no applicability to the facts of the present case.
Mr. Rohit Madan, learned counsel for the Appellant, drew the attention of the Court to the order of the Assessing Officer (''AO'') which noted that in the profit and loss account of the Assessee for the AY in question a brought forward loss had been set off by the share premium and the balance loss had been transferred to the balance sheet. However, the Court finds that no such question was raised by the Revenue before the ITAT. Even in the present appeal, no such ground has been raised.
The Court does not find any substantial question of law arising from the impugned order of the ITAT which requires examination.
The appeal is dismissed.