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2013 (2) TMI 264 - ITAT BANGALOREProfits chargeable to tax - assessee has acted as commission agent for the transaction - addition invoking provisions u/s 41(1)(a) - Held that:- Sec.41(1) is a deeming fiction and seeks to tax receipt or benefit which may not strictly be 'income', the burden to prove that a particular benefit or receipt falls within the four corners of the provisions of sec.41(1) lies upon the revenue. The conclusion drawn by the CIT(A) by invoking u/s 41(1) are purely on surmises. There is no evidence on record, to show that a sum of Rs. 25,30,792.86 which was admittedly, liability payable by the assessee to M/s IMC was adjusted towards the commission payable to the assessee by M/s IMC. The fact that no confirmation was filed from M/s IMC cannot lead to the conclusion that there was a cessation or remission of liability of the assessee warranting invocation of provisions of sec.41(1). The reliance placed by the Assessee on the decision of CIT v. Shri Vardhman Overseas Ltd. [2011 (12) TMI 77 - DELHI HIGH COURT] supports the plea of the Assessee. In that case the Assessee wrote of the liability by crediting the amounts outstanding in the profit and loss account but showed them as liability in the Balance Sheet confirming a fact that the liability is reflected in the balance sheet of the Assessee was an acknowledgement of liability which can be relied upon by the credit for saving limitation of time for action by legal proceedings u/s.18 of the Limitation Act, 1963. In the present case there is not even such a write off in the profit and loss account. In such circumstances, the action of the revenue authorities in brining to tax the disputed amount by invoking provisions of Sec.41(1) cannot be sustained. Even assuming that the Commissioner has sustained the addition on the basis that a sum of Rs. 25,30,792.86 is commission income of the assessee, the same is without any evidence and is purely on surmises, therefore deserves to be deleted - in favour of assessee.
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