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2014 (3) TMI 332 - AT - Income TaxAddition made as cessation of liability u/s 41(1) of the Act – Held that:- The appellant has tried to demonstrate that in subsequent year the requisite entry in the books of account have been made but that was being a capital receipt - the amount was transferred to capital reserve account – Relying upon Shri Vishnu Anant Mahajan Versus ACIT Baroda [2012 (6) TMI 297 - ITAT, Ahmedabad] and CIT Vs. Sugauli Sugar Works Pvt. Ltd. [1999 (2) TMI 5 - SUPREME Court] - a unilateral action in writing off the liability do not amount to remission or cessation of liability - the AO has unilaterally acted and considered that the liability in question had ceased to exist - On both the counts that the liability being capital in nature cannot be taxed in the hands of the assessee – the order of the CIT(A) set aside – Decided in favour of Assessee. Addition made u/s 68 of the Act – Unexplained cash credits – Held that:- In a situation when the directors are subject to tax and filing the returns of income in their independent capacity - the requisite inquiry should have been made in their respective hands – the decision in Commissioner Of Income Tax Versus Steller Investment Ltd. [2000 (7) TMI 76 - SUPREME Court] followed - part relief given by the learned CIT(A) was not in line with the several judgments passed in this regard that the proper action is required to be taken in the hands of the persons in whose accounts the credit is appearing instead of invoking the provisions of Section 68 in the case of the company-assessee – thus, the addition made is directed to be set aside – Decided in favour of Assessee.
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