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2019 (2) TMI 170 - AT - Income TaxAddition u/s 69B - difference between closing stock as per the books vis-à-vis stock statement given to the bank - Held that:- In the present assessment year, there is no independent finding at the end of the AO or CIT(A). There is no variation on facts that except the difference between the stock statements available in the books vis-à-vis given to the bank has been scaled down between A.Y.2009-10 to this assessment year. CIT(A) has observed that addition has been made on the basis of the finding recorded in the Asstt.Year 2009-10. Therefore, considering the fact that there is no disparity between the facts of both these years, we are of the view that the issue is squarely covered by the decision of jurisdictional High Court in the assessee’s own case for the Asstt.Year 2009-10. The ld.CIT(A) has rightly deleted the addition. This ground of appeal is rejected. Addition u/s 41(1) - credit against names of five parties had remained outstanding in the books of the assessee from the F.Y.2007-08 - AO directed the assessee to explain as to why this liability should have not been considered as ceased - AO harboured a belief that liability to pay has ceased, and therefore, it deserves to be treated as income under section 41(1) - Held that:- The section 41(1) applies where a trading liability was allowed as a deduction in an earlier year in computing the business income of the assessee and the assessee has obtained a benefit in respect of such trading liability in a later year by way of remission or cessation of the liability. In such a case the section says that whatever benefit has arisen to the assessee in the later year by way of remission or cessation of the liability will be brought to tax in that year. The principle behind the section is that the provision is intended to ensure that the assessee does not get away with a double benefit - once by way of deduction in an earlier assessment year and again by not being taxed on the benefit received by him in a later year with reference to the liability earlier allowed as a deduction. There is nothing in the possession of the Revenue to doubt the non existence of the liability, more so, if the facts are being examined in the light of Hon’ble High Court’s decision in the case of CIT Vs. Bhogilal Ranjibhai Atara [2014 (2) TMI 794 - GUJARAT HIGH COURT]. On due consideration of the above facts, we do not find any merit in this ground of appeal of the Revenue. Disallowance of commission expenses - AO had issued a show cause notice inviting explanation of the assessee as to why this commission should not be disallowed, and more particularly, how can HUF be acted as an agent, and commission should be paid - Held that:- No such inquiry has been made. As far as allegations of commission paid to the HUF are concerned, HUF is a separate legal entity. The ld.CIT(A) did not dispute about the payment of commission to HUF, but recorded a finding against the assessee for statistical purpose, because this payment to HUF is also confirmed because it is part of total commission claim at ₹ 53,56,535/- which has been disallowed by the AO and confirmed by the ld.CIT(A). CIT(A) did not deem it necessary to examine this aspect. This finding of the ld.CIT(A) recorded has not been challenged by the Revenue in its appeal. Services on behalf of the HUF could be rendered by Karta, and commission payment merely on account that it is juridical taxable entity, cannot be disallowed. Assessee has brought on record evidence justifying the payment of commission, which is just 0.60% on the total sales. AO except suspecting incurrence of such expenditure did not make any inquiry. Therefore, we allow this ground of appeal, and delete disallowance - decided in favour of assessee.
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