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2014 (1) TMI 543 - AT - Income TaxAddition on account of Suspense Account Treating it as income u/s 28(iv) of the Act – Held that:- As per the provisions of section 28(iv) of the Act, the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession is chargeable to Income Tax under the head “profits and gains of business or profession” – Following CIT vs. Bhavnagar Bone and Fertiliser C. Ltd. [1986 (7) TMI 37 - GUJARAT High Court] - there must be a nexus between the business of the assessee and the benefit which the assessee has derived in order to attract the provisions of section 28(iv) of the Act - There is no nexus established in the present case between the business of the assessee and the benefit which the assessee has alleged to have derived from the credit balance in the suspense account. The benefit, if any, as a result of difference in the balance sheet thus was derived by the assessee in A.Y. 1985-86 itself and the resultant addition u/s 28(iv) of the Act could have been made only in that year and certainly not in the year under consideration wherein the suspense account balance carried forward for 20 years was simply reflected in the balance sheet – There appears to be the reason why no addition on account of suspense balance was made by the A.O. in the assessment completed in the case of the assessee - the assessee is following cash system of accounting and as held in CIT vs. American Consulting Corporation [1979 (8) TMI 40 - ORISSA High Court] - Income u/s 28(iv) on account of benefit can be assessed to tax only on receipt basis - there is nothing brought on record by the Revenue to show that any such benefit was actually received by the assessee in cash on account of suspense account balance - thus, the addition made by the A.O. u/s 28(iv) of the Act on account of suspense account balance pertaining to the earlier year is not sustainable – Decided in favour of Assessee.
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