Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (7) TMI 691 - AT - Income TaxLiability in respect of wages - assessee's failure to furnish the details of such miscellaneous liabilities - Held that:- The details of relevant liabilities were not produced by the assessee before AO and the same furnished before CIT(A) for the first time were relied upon by him to give relief to the asessee without giving any opportunity to AO. There is, therefore, violation of Rule 46A and this position is not disputed even by Ld. A/R. We, therefore, set aside the matter to AO. Addition of ceased liability - addition under the head investment allowance reserve - whether the amount of Reserve has not been utilized for acquiring ‘plant & machinery’ within the period of 8 years from the date of creation and for not filing any evidence by the assessee - Held that:- Sub-Section (1) of Section 32A is clear that there shall be a deduction equal to the 25% of actual cost of machinery or plant installed in the immediately succeeding previous year that in respect of investment reserve created for the business purpose. Sub-Section (6) of Section 32AB defines that if, said investment reserve is not utilized within the specified time and the same is deemed to be profit and gain of business of that previous year. In the present case, the said amount appears to be created in the A.Y 1997-78 debiting to the P & L account and there was no dispute that the factory of assessee was taken over by the Bihar State Financial Corporation on 01.04.1981, then the question would arise whether the AO could add a sum of ₹ 10,50,000/- as ceased liability u/s 41(1) of the Act. In our opinion, the AO can add the same as deemed profit and gain of business of that previous year under Sub-Section (6) of Section 32AB of the Act. In the present case investment reserve was created in the A.Y 1997-78 and there was no business activity of the assessee since 01-04-1981 and the AO can not treat the unutilized investment reserve as deemed profit and gain of business of the year under consideration i.e 2007-08 under Sub-Section (6) of Section 32AB of the Act and the addition under section 41(1) of the Act can not be applied taking into consideration that the assessee was not claimed any deduction in respect of amount ₹ 10,50,000/- under the head investment allowance reserve credited to Profit & Loss account, Therefore, we find no infirmity in the order of CIT-A in finding that the addition of amount ₹ 10,50,000/- u/s 41(1) of the Act by the A.O is not justified as the investment reserve was not created by an allowance or deduction in any year in respect of any Loss, Expenditure or Trading Liability incurred by the assessee. - Decided in favour of assessee
|