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2014 (5) TMI 998 - AT - Income TaxAddition u/s 41(1) - Remission / cessation of liability - Book adjustment of advance received from customers – Held that:- CIT(A) was of the view that JGW actually received the money due to it by the assessee from L &T, and L &T in turn, owed money to the assessee - The balance standing credit to the a/c of JGW in the books of assessee in no way can be treated as income of the assessee in view of the fact that JGW has actually received this amount on a/c of the assessee from L&T - the amount of Rs.76,90,367/- has already been received by JGW from L &T on a/c of the assessee to give effect to this transaction in books of assessee all that is needed to be done is that the amount will be debited to the a/c of JGW and credited to the a/c of L &T in the books of the assessee - It will have the effect of reducing the debit balance of rs.11,65,00,000/- of L &T by Rs.76,90,367/- and balance of JGW to NIL. Rs.76,90,367/- will not be written back and treated as income u/s 41 of the Act but will be adjusted to the account of L &T in the books of assessee - Section 41(1) will not be attracted as there has been no remission or cessation of such liability – there is no reason to interfere in the order of the CIT(A) – Decided against Revenue. Deletion of bad debts – Held that:- There is no infirmity arrived at in the impugned order as the assessee has shown the amount as sales in the previous years which has formed part of its income - when the bad debts claimed have formed part of sales of the assessee in the previous year the occasion for it not forming part of its income does not arise - claim of bad debts cannot be disallowed and added to its income as it fully meets the requirement of Section 36(2) (i) of the Act - The CIT(A) has rightly allowed the assessee’s claim – Decided against Revenue.
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