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2019 (3) TMI 1973 - AT - Income TaxCessation of liability u/s 41(1) - liability against the total addition made by the AO towards outstanding land advance treated as income u/s 41(1) - HELD THAT:- In this case, the Assessing Officer had considered the liability as ceased/non-existence, because of the fact that the liability is being shown as outstanding and the assessee has not provided confirmation from the creditors or has failed to provide necessary details like PAN/Address of the creditors or there is no possibility of the creditors claiming their debts in future and applied section 41(1) of the Act by adding the liability to the taxable income of the debtor. It is an agreed position that in the assessee's balance sheet, the impugned liabilities have been shown, which are payable to the sundry creditors. Such liabilities, shown in the balance sheet, indicate the acknowledgement of the debts payable by the assessee. Merely because such liability is outstanding for the last two to three years, it cannot be presumed that the said liabilities have ceased to exist. It is also conceded position that there is no bilateral act of the assessee and the creditors, which indicates that the said liabilities have ceased to exist. In absence of any bilateral act, the said liabilities could not have been treated to have ceased. CIT(A) has rightly held that the AO was not correct in coming to the conclusion that the entire land advances of ₹.2,84,45,000/- should be treated as income for the assessment year 2014-15 under section 41(1) of the Act by rejecting the contention of the assessee that the portion of the outstanding liability amounting to ₹.1,66,90,000/- had been admitted in the Return of Income filed for the assessment year 2014-15. Thus, in view of the above facts and circumstances of the case, we are of the considered opinion that the CIT(A) has rightly directed the Assessing Officer to delete the balance liability amounting to ₹.1,17,55,000/- which the assessee claims not having been written off yet in its books of account. Thus, the ground raised by the Revenue stands dismissed.
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