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2011 (7) TMI 1327 - ITAT DELHIUnconfimed Creditors u/s 69 - Assessee firm was having two old creditors - Notice send by AO to them were returned unserved - AO treated them as unconfirmed creditors, therefore made addition - CIT (A) deleted such additon on the ground that the creditors were old and did not pertain to the year under scrutiny - HELD THAT:- The fact that the creditors were old creditors brought forward from earlier years has not been disputed by the department. These creditors have not been introduced during the year under consideration. There is no evidence or material on record to establish that the asessee’s liability to pay the amount to the creditors have been ceased during the year under consideration. We, therefore, hold that the ld. CIT(A) is justified in deleting the addition. The amount payable to these creditors can be added to the assessee’s total income in the year in which the assessee’s liability to pay the amount ceases or extinguished and not in the year under consideration where assessee has admittedly shown the liability in the balance sheet. Thus, the ground raised by the revenue is rejected - Revenue Appeal Dismissed. Disallowance of salary and interest paid to partners - AO disallowed the assessee's claim by stating that in partnership deed there was no clause of quantum of salary paid and rate of interest payable to partners - CIT(A) upheld such disallowance - HELD THAT:- It is the assessee’s case that there was a stipulation in the supplementary deed of partnership regarding payment of salary and interest to the partners as so provided u/s 40(b)(v) applicable from the A.Y. 1993-94. which was not examined by CIT(A). We, therefore, restore this matter back to the file of AO for his fresh consideration after ascertaining as to whether a supplementary deed of partnership was submitted by the assessee in A.Y. 1994-95 and whether the situation had remained the same till this assessment year. The AO shall also ascertain whether identical claim of payment and salary and interest has been allowed in earlier assessment years - Matter restored back. Admission of Additional Grounds as CIT(A) didn't comment on such ground - AO’s action in disallowing 5% of the total expenses in the absence of books of account or bills or vouchers - HELD THAT:- Assessee should be allowed to raise this ground. We accordingly admit this ground and restore the same to the file of AO for his fresh adjudication after examining the books of account and after providing reasonable opportunity of being heard to the assessee - Decision in favour of Assessee.
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