Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (6) TMI 139 - AT - Income TaxAddition made on account of cessation of liability – Held that:- Following CIT vs. Nitin Garg 208 Taxman [2012 (5) TMI 30 - Gujarat High Court] - the assessee had continue to show admitted amount as liability in the balance sheet cannot be added u/s 41(1) of the Act on the ground remission or cessation of trading liability - even the liability itself seems under serious doubt - The AO undertook the exercise to verify the records of the so called creditors - Many of them were not found at all in the given address - In one or two cases, the response was that they had no dealing with the assessee nor did they know him - the inquiries were made ex parte and in that view of the matter, the assessee would be allowed to contest the findings - the liability as it stands perhaps holds that there was no cessation or remission of liability - the amount in question cannot be added back as a deemed income u/s 41(c) of the Act - The assessee has not credited the liability in the book of account and had not shown as income during the year - The AO found that the lenders had not shown this amount in the balance sheet as debtors – but, the assessee’s intention is to pay the amount to the lenders - the order of the CIT(A) is set aside – Decided in favour of Assessee. Addition made – Outstanding amount of money borrowed – Held that:- Both the parties M/s. Ambica Mills and M/s. Shatmurti Investment and Trading Pvt. Ltd. had gone into liquidation – assessee being secured creditor, filed a case for recovery of amount through liquidator for amount of Rs.2,57,04,019/- (principal + interest) - The details of the case filed by both the parties, were considered by the CIT(A) in his findings - M/s. Shatmurti Investment and Trading Pvt. Ltd. also filed Civil Suit against M/s. Ambica Mills Ltd. for recovery of Rs.1,14,12,473 - The Skylark Finance Ltd. had confirmed the outstanding balance as on 31.03.1998 from its books of account – thus, the CIT(A) was justified in deleting the addition - Decided against Revenue.
|