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2016 (10) TMI 489 - ITAT JAIPURAddition u/s 41(1)(a) - unilateral remission of liability - Held that:- Where the creditor company is confirming to the Assessing officer not once but on couple of occasions through written confirmations that the amount is not payable by the assessee, there is nothing more that the Assessing officer can do to come to a conclusion that the amount is no more payable by the assessee. In our view, given that the assessee is still claiming the amount as payable in its books of accounts, it is a matter where the creditor has taken some unilateral steps whereby it is not demanding or pressing for such payment. The reason could be unilateral write off of old outstanding amounts as not recoverable from the assessee or due to some accounting mismatch as claimed by the assessee. The fact remains that the creditor is no more demanding any such amount from the assessee and has confirmed the same to the Assessing officer. In light of these facts, it is a clear case of unilateral remission of liability in the hands of the assessee. What is relevant is to determine the year of obtaining the benefit as the benefit can be brought to tax in that year itself and not in any other year. In the instant case, M/s Tirupati Balaji Mineral Pvt. Ltd. has confirmed that there are no transactions during the previous year under consideration as well as the fact that there is no opening balance in the account of the assessee maintained in their books of accounts for the year under consideration. It is therefore clear that the unilateral action on the part of M/s Tirupati Balaji Mineral Pvt. Ltd. in remitting the subject amount has not happened in the previous year under consideration. In light of the same, even where the assessee has obtained the benefit by way of remission of its trade liability, the same cannot be brought to tax during the year under consideration as the event of remission has not happened during the year. Hence, the addition of ₹ 3,16,553 under section 41(1)(a) is hereby deleted. Regarding amount payable in respect of M/s Kay Jay Marbles Ceramics Pvt. Ltd all the facts lead the Assessing officer to treat the amount as taxable under section 41(1)(a) of the Act. There is however no evidence to support the proposition that there is a unilateral action on the part of the creditor in terms of remission of liability unlike the case of M/s Tirupati Balaji Minerals Pvt ltd. Further, the assessee continues to show the liability in its books of accounts and has also not done any unilateral write off in its books of accounts. In such situation, merely because the amount is outstanding since 2003, it cannot be inferred that the liability has ceased to exist and the assessee has obtained any benefit by way of remission or cessation of its trading liability. There has to be some positive evidence or action on the part of the assessee or the creditor to support the theory of remission or cessation which is apparently not present in the instant case. Having said that, we donot feel the necessity to examine the contention of the assessee that since the purchases are included in the closing stock, there has been no deduction that has been claimed by the appellant. We leave this contention open. Hence, in light of above, we donot agree with the position adopted by the Revenue that it is case which falls within the four corners of section 41(1)(a) of the Act. Hence, the addition of ₹ 1,81,251 under section 41(1)(a) is hereby deleted.
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