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2020 (10) TMI 601 - AT - Income TaxAddition invoking the provisions of Section 56(2)(ix) - advances received - AO observed that, the assessee had no intention to repay the creditors, the assessee diverted the funds to acquire fixed assets and investments - bulk of amount received from Metro Corporation was invested in individual name of assessee and unless the assessee has changed the categorization of receipt to be his own and not longer to be creditors, the assessee would not have used it for acquisition of assets/investments in his own name - HELD THAT:- The assessee wrote back the amount to the P&L account because the various trade parties did not claim these amounts for a long time. The unclaimed surplus balances retained by the assessee itself was treated as trade receipt by bringing it to the P&L account and the claim of the customers have become barred by limitation - As treated as trade receipt of the assessee. In the present case, the amount was received by the assessee in the course of his business operations and it was shown as liability in his Balance Sheet till the F.Y. ending 31/03/2015 relevant to the A.Y. 2015-16. There was no write off by the assessee by crediting it to the P&L account. By showing the balance as outstanding in the Balance Sheet, the debit is acknowledged by the assessee and the lender also confirmed the same. It cannot be said that the claim of the parties has been barred by time. The present case, the specific provision is sec. 56(2)(ix) which is in relation to capital asset. There is no forfeiture of the amount so received by the assessee and it is outstanding in the books of account of the assessee and also confirmed by the lenders. There is also no negotiation for transfer of capital asset by the assessee with these two parties. Thus, the assessee’s case is not hit by the provisions of section 56(2)(ix) of the I.T. Act. - Decided in favour of assessee.
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