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2021 (12) TMI 648 - ITAT AHMEDABADCessation of liability u/s 41(1) - Incomplete project - advances from various persons against the Tower D & E of Bhadralok Project - possession of concerned properties not given not even advances received - HELD THAT:- The section 41(1) applies where a trading liability was allowed as a deduction in an earlier year in computing the business income of the assessee and the assessee has obtained a benefit in respect of such trading liability in a later year by way of remission or cessation of the liability. The assessee has submitted that it has launched a scheme i.e. Towers “D” and “E” at Bhadralok Project. It has received advances from prospective buyers. However, when residential flats in Tower “D” & “E” were under construction and possession of the same were not handed over to the respective buyers, the assessee has shown these advances as liability, because there prevailed contingency as to finalization of sale. Assessee has received trade advance for sale of certain flats to prospective buyers which were ultimately not construed by it and incomplete project was sold under the head “work-in-progress”. It has not returned money to these customers in the last fifteen years. It has not created an arrangement with buyer of the WIP that these customers would get flats at reduced price by the amount received by the assessee as advance. It has simply retained these amounts under the garb of liability without paying any taxes. The judgment Hon’ble Supreme Court in the case of Sundaram Iyengar & Son Ltd. [1996 (9) TMI 1 - SUPREME COURT] is fully applicable on the facts of the present case. Therefore, we allow appeal of the Revenue.
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