(1)Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the first-mentioned person) and subsequently during any previous year,-(a)the first-mentioned person has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not; or(b)the successor in business has obtained, whether in cash or in any other manner whatsoever, any amount in respect of which loss or expenditure was incurred by the first-mentioned person or some benefit in respect of the trading liability referred to in clause (a) by way of remission or cessation thereof, the amount obtained by the successor in business or the value of benefit accruing to the successor in business shall be deemed to be profits and gains of the business or profession, and accordingly chargeable to income-tax as the income of that previous year.[Explanation 1. - For the purposes of this sub-section, the expression "loss or expenditure or some benefit in respect of any such trading liability by way of remission or cessation thereof" shall include the remission or cessation of any liability by a unilateral act by the first mentioned person under clause (a) or the successor in business under clause (b) of that sub-section by way of writing off such liability in his accounts.] [ Inserted by Act 33 of 1996, Section 16 (w.e.f. 1.4.1997).][Explanation 2] [ Explanation renumbered as Explanation 2 by Act 33 of 1996, Section 16 (w.e.f. 1.4.1997).][.-For the purposes of this sub-section, "successor in business" means,-(i)where there has been an amalgamation of a company with another company, the amalgamated company;(ii)where the first-mentioned person is succeeded by any other person in that business or profession, the other person;(iii)where a firm carrying on a business or profession is succeeded by another firm, the other firm;](iv)[ where there has been a demerger, the resulting company.] [ Inserted by Act 27 of 1999, Section 24 (w.e.f. 1.4.2000).]
