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2016 (3) TMI 863 - AT - Income TaxAddition u/s 41(1) - amount payable by the assessee company to 5 creditors - Held that:- Hon’ble Supreme Court in the case of CIT Vs Sugauli Sugar Works (P) Ltd. (1999 (2) TMI 5 - SUPREME Court) held that mere unilateral entry made by the assessee in accounts, there is no cessation of liability. In the case on hand, the assessee has not even written back the creditors in its accounts. The Hon’ble Bombay High Court in the case of Indian Rayon & Industries (2010 (3) TMI 299 - BOMBAY HIGH COURT) held that there is no remission or cessation of liability within the meaning of Sec. 41(1) of the Act on unilateral entry of write back of the unclaimed credit balances by the assessee. In view of the above, we hold that the addition made by the AO u/s. 41(1) of the Act is to be deleted. - Decided in favour of assessee Addition towards decrease in stock - Held that:- The appellant has claimed reduction in stock on account of damage of stock in the heavy rains and selling of' goods on minimal prices. The fact of loss to appellant on account of heavy rains occurred in Mumbai, in July 2005, and consequently damage of appellant's stock was also subject matter of appeals of earlier years. In A.Y. 2006-07, the appellant's claim of gross loss of ₹ 8.25 crore was disallowed by the AO. In appeal order, the disallowance made by AO was deleted. The Sales Tax Authorities have also considered the effect of heavy rains of 2005, on appellant's business and loss to the appellant in their sales tax assessment order. It has been mentioned in such sales tax assessment order that the Insurance Company also rejected the appellant's claim and the dealer (appellant] closed down its business. In the facts and circumstances, the appellant's claim of selling the stock at throwaway price appears to be convincing. Moreover, the AO has not brought on record any evidence that the appellant sold the stock outside the books of accounts. In the facts and circumstances, there was no case for rejecting the appellant’s claim. The disallowance made by AO is therefore, deleted. - Decided in favour of assessee
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