Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2010 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (12) TMI 915 - AT - Income TaxAddition invoking Provisions of section 41(1) - CIT(A) set aside the addition - Held that:- If there are payments made by the assessee to M/s. GFIL in the subsequent years and if it was accepted by the Assessing Officer in the subsequent years that may be one of the relevant factors to consider as to whether it was a bona fide trading liability which still continue to exist. However, the assessee has to furnish the details in respect of the issues highlighted by the AO i.e., what was the purpose sought to be achieved by the assessee by entering into the agreement with the sister concern with regard to the discounting transaction and if it can be projected then there would have been some benefit to the assessee out of it, it can well be treated as a trading liability as otherwise merely because it was considered as a trading liability in the first year, it cannot continue to remain as a trading liability atleast in the year in which it was noticed that it was a colourable transaction. Since, the assessee had not been carrying on any business in the years under consideration and from the agreement entered into with the associate concern assessee appears to have not obtained any benefit from the time the agreement was entered into - It cannot be said that assessee was not aware of the activities of the sister concern and assessee cannot plead that it is naive to the fact that there are no chances of making fair profit - Therefore, it is for the assessee to highlight as to what prompted it to enter into such transaction and how it had benefited the assessee in any of these earlier years as well as in the years under consideration - The expression "cessation" or "remission" of liability was subject matter of consideration by various Courts and various principles were laid down which can act as guiding factors in order to consider as to what can be classified as remission or cessation of trading liability - order of the learned CIT(A) deserves to be set aside & restore the issue to the file of the Assessing Officer for fresh consideration - Thus, the appeal filed by the Revenue is treated as allowed for statistical purposes.
|