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2014 (6) TMI 253 - AT - Income TaxMaintainability of addition u/s 41(1) of the Act – Trade credits reflected as liabilities in the books of account – Held that:- There could be genuine and valid reasons obtaining in a particular case, so that a credit though outstanding in the books for long, represents a genuine liability - it could be that the liability remains to be recovered for want of time or resources with the creditor, i.e., to pursue the legal recourse - If so, the recalcitrant debtor stands benefited to that extent - the matter is primarily and essentially factual. Relying upon CIT vs. Chipsoft Technology (P.) Ltd. [2012 (8) TMI 154 - DELHI HIGH COURT] - The interpretation of law, particularly fiscal and commercial legislation, is to be based on pragmatic realities - an omission to pay could give rise to the legal inference of cessation of liability - the assessee failed to furnish confirmations from the two creditors - the basis of relief to the assessee by the CIT(A) was an absence of any material with the Revenue to exhibit a remission or cessation of the liability - The primary onus to prove its return, and the claims preferred is only on the assessee – assessee have furnished a certificate with regard to the account statements being furnished before the assessing authority as well as the CIT(A), and which could be false only at the risk of perjury and the confirmation of the additions being adjudicated – thus, the matter is required to be remitted back to the AO for verification of the Assessee claim – Decided in favour of Revenue.
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