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2015 (7) TMI 517 - AT - Income TaxAddition on net increase in the assessee’s capital on account of write back as well as write off of some old credits and debits appearing in accounts - Income – Concept & Scope - Held that:- We confirm the assessment of the impugned sum as income, which would, in the absence of the establishment of the cause of remission or cessation of liability, fall to be assessed under Chapter IV-F under the head ‘income from other sources’ u/s. 56. When an amount, which is stated, claimed and accepted as a payable, is no longer so, the assessee gains to that extent. There is nothing unreal or notional about this gain. It can show that, even so, the same is not chargeable as income or no tax liability is attracted in-as-much as the benefit is not in the nature of income. The assessee offers no such explanation. What is admitted though is that there has been remission/cessation of liability in-as-much as these are no longer payable. Why? No reason is advanced. It is under these circumstances that the law permits the A.O. to draw an adverse inference of it as representing the assessee’s income. As regards the year, there can again be little doubt in the matter. The impugned credit/s, which we have found as a fresh credit/s, is during the current year. The liability was accepted as genuine for and up to the immediately preceding year, while it is no longer payable as at the year-end. The taxable event, in terms of gain, thus, has taken place during the year, even if one considers the passing of the journal entry, recording so, on a particular (single) date in the books, to be a matter of convenience only. It is for these reasons that we find the impugned credit as corresponding and answering to the concept of income under section 2(24) and, further, as standing to fall to be assessed u/s. 56(1) and 56(2), finding strong support in the decision in the case of T.V. Sundram Iyengar [1996 (9) TMI 1 - SUPREME Court]. - Decided against assessee. Addition being the write back of earlier year expenses to the assessee’s capital account for the year - Held that:- . No taxable event has taken place in the current year, as well as, as it appears, in the past. A reversal of a wrong entry, having no income or expense implication, cannot, by any stretch of imagination, result in income. Book entries do not create income but merely recognize it. In fact, even the Act does not define ‘income’ conclusively, but only in terms in which it ordinarily manifests itself. The Revenue has wholly failed to discharge the onus on it to show that any income has either arisen or stood received by the assessee during the year, which could only be by showing that the credit written back, stated to be fictitious by the assessee, was actually not so but represented an actual liability of the assessee, so that she has actually gained to that extent. There is also no case of the assessee owning a godown and being entitled to rent in its respect or for ground-rent qua the same, for the current or even an earlier year. It is for these reasons that we stated at the beginning of our discussion of our finding no appeal or merit in the Revenue’s case. We decide accordingly, directing the deletion of the impugned sum.- Decided in favour of assessee.
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