Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (3) TMI 143 - ITAT MUMBAIAddition u/s 41(1) - cessation of liability in view of continuing operations with the party - HELD THAT:- The provision of Section 41(1) provides that where assessee has obtained any benefit in respect of trading liability by way of remission or cessation same is taxable in the hands of the assessee in the year of cessation. The above liabilities are outstanding in the balance sheet of the assessee. They have not been written back by the assessee nor there is any evidence that these liabilities have been waived by the creditors. These liabilities are existing in the books of the assessee as payable. CIT (A) has categorically held that there is no evidence of cessation of this liability and therefore, addition u/s 41(1) is not sustainable. We also find that there is no evidence that the liability for payment of the above sum has ceased. This is also so because the assessee being assessed u/s 143(3) of the Act in earlier years, no such addition on account of current balances of Sundry Creditors was made. It is also not shown that any of the liability is non existing. In Principal Commissioner of Income Tax-6 V New World Synthetics Ltd [2018 (9) TMI 230 - DELHI HIGH COURT] it is held that Non-payment of outstanding liability which is admitted and acknowledged as due and payable by an assessee does not indicate remission or cessation of liability - We do not find any infirmity in the order of the CIT (A) in deleting the addition u/s 41(1). Ground no 1 of appeal is dismissed. Disallowance of the expenses claimed on ad hoc basis - CIT (A) has categorically held that there is no reason to uphold the addition because it was merely an estimate and that too without any basis - HELD THAT:- We find that in the earlier years this was the only dispute and same was not challenged before any appellate authority. In the present year, CIT (A) held that all the details of expenses were provided to the AO. If the AO was of the view that some of the vouchers are missing, the amount of addition should have been made of the same amount. Merely due to smallness of amount cannot result into any disallowance. We do not find any infirmity in the order of the CIT (A) in deleting the disallowance out of the expenses. The order of the learned CIT (A) is confirmed. Appeal of AO dismissed.
|