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2019 (2) TMI 1461 - ITAT AMRITSAROutstanding creditors - cessation/ remission of liability u/s 41(1) - addition u/s 69A - power of CIT(A) to issue direction u/s 150(1) - HELD THAT:- If the assessee paid the creditors, s. 69A would come into play. If, on the other hand, someone paid them on assessee’s behalf u/s 41(1) would get attracted on account of cessation of a trade liability; the assessee admittedly not incurring any other liability in lieu of such payment. Thirdly, if, as claimed, no amount stands paid to the creditors – with they introducing their own money, s. 41(1) would again get attracted on account of remission of the trade liability. No hesitation in upholding the assessment as the assessee’s income, being the amount by which the assessee’s liability to SSS has undergone reduction during the current year. Though one could argue that the assessee’s accounts reflecting a total liability to the trade creditors at ₹ 14.43 lacs, which does not exist as at the year-end, so that the entire amount ought to be, as by the AO, assessed as income, it needs to appreciated, that the evidence with the Revenue, in the form of denial of the assessee’s debt in their favour by the trade creditors, itself states of reduction in the said liability over a period of time. Agree with the CIT(A) that the reduction obtaining during a particular year is to be assessed as income for that year. His directions, accordingly, to that effect to the AO u/s. 150(1), subject to the fulfillment of the conditions u/s. 150(2), cannot be faulted. However, of the payment of ₹ 4 lacs to JRJC during f.y. 2004-05, ₹ 3 lacs stands already paid during f.y. 2003-04 as per the assessee’s accounts. Accordingly, it is only the difference, i.e., ₹ 1.0 lac, that can be assessed as income u/s. 41(1) for AY 2005-06 on that account. This aspect shall be duly considered by the AO while giving effect to the said directions by the ld. CIT(A).
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