TMI Blog2023 (3) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, 2015, passed under Section 143(3) of the Income tax Act [ the Act] by the learned Assessing Officer was allowed. 02. The learned Assessing Officer is aggrieved with the deletion of the addition of ₹8,46,87,207/- under Section 41(1) of the Act and further the deletion of disallowance of ₹1,50,000/- out of the expenses claimed on ad hoc basis. 03. The fact shows that assessee is a company engaged in providing civil work as a sub-contractor, filed its return of income on 29th September, 2012 at a total income of ₹11,93,940/-. The return was selected for scrutiny. The learned Assessing Officer noted from the balance sheet that assessee has trade payable amounting to ₹8,46,87,207/-. The assessee was asked to subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee provided explanation during the assessment proceedings that the accounts of the creditors was a running account when there was a opening balance payable to a person as added by the further amounts payable for the work done as reduced by the amounts paid leaving a sum outstanding at the year end, the same cycle repeats year to year. Accordingly, the liability payable to laborers is paid continuously and the question of cessation of liability does not arise. Accordingly, he held that the addition made by the learned Assessing Officer is on mis-appreciation of facts. Thus, the addition was deleted. 06. With respect to the ad hoc disallowance of ₹1,50,000/-, the learned CIT (A) held that the ad hoc disallowance in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incipal to the assessee naturally results in delay in payment of the creditors of the assessee. The amount payable to the creditors is outstanding at the end of the year, the bills or the payments made are also adjusted and further the closing balance becomes a running cycle. A continuous payment is made to these parties. Assessee is assessed under Section 143(3) of the Act for A.Y. 2010-11 on 5thMarch 2013, for A.Y. 2011-12 on 25th February, 2014 and for both these years, wherever the liabilities has arisen, there is no finding that these liabilities are not existing. The provision of Section 41(1) of the Act provides that where assessee has obtained any benefit in respect of trading liability by way of remission or cessation same is taxab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner (Appeals) and the Tribunal relying upon the decision of the Gujarat High Court in the case of CIT v. G.K. Patel Co. [2013] 29 taxmann.com 248/212 Taxman 384 and the decision of the Delhi High Court in the case of CIT v. Jain Exports (P.) Ltd. [2013] 35 taxmann.com 540/217 Taxman 54 (Mag.). 6. The Delhi High Court in the case of Jain Exports (P.) Ltd. (supra) has relied upon the decisions of the Supreme Court in the case of Bombay Dyeing and Manufacturing Co. Ltd. v. State of Bombay AIR 1958 SC 328 and CIT v. Sugauli Sugar Works (P.) Ltd. [1999] 102 Taxman 713/236 ITR 518. In Sugauli Sugar Works (P.) Ltd. (supra), the Supreme Court has referred to the decision of the Division Bench of this Court in the case of Kohinoor Mil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier years, identical disallowance should be upheld. 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, the learned CIT (A) held that all the details of expenses were provided to the learned Assessing Officer. If the learned Assessing Officer was of the view that some of the vouchers are missing, the amount of addition should have been made of the same amount. Further, merely due to smallness of amount cannot result into any disallowance. Therefore, we do not find any infirmity in the order of the learned CIT (A) in deleting the disallowance of ₹1,50,000/- out of the expenses. In the result, the order of the learned CIT (A) is confirmed. 014. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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