Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (4) TMI 603 - ITAT AHMEDABADDisallowance of the liability shown by the assessee - addition u/s 41 - Held that:- Either liability is genuine or non-genuine. It cannot be disallowed at the rate of 20%. Apart from the above, section 41(1) of the Income Tax Act has been incorporated to cover a particular fact situation. The section 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. The assessee has shown outstanding liability in his accounts. The ld.Revenue authorities nowhere demonstrated as to how this liability has ceased. The AO simply believed that 20% of the liability must have been ceased. We fail to appreciate this approach. When the assessee has shown the liability in the account, unless it is established that this liability has ceased, it cannot be added in the income of the assessee - Decided in favour of assessee Addition u/s 194C r.w.s 40(a)(ia) - non deduction of tds on transportation charges to the transporters - Held that:- Revenue authorities have assumed existence of a contractor-ship between transporters and the assessee. They assumed that the assessee has taken contract from factory owners for supply of lignite and coal, and it has carried out this activity with the help of truck owners. Therefore, there is subcontractor- ship between him and the truck owners, he was required to deduct TDS on the payment made to truck owners. In our opinion, there is no evidence with the AO for harping on such a belief. The AO has not collected evidence of transportation. He has not examined ultimate suppliers of lignite and coal. Nor he has examined truck operators. When the assessee has been alleging that he was only extending facility to his client for delivery of lignite and coal, he has not acted as an agent between client and truck owners. Therefore, in our opinion, merely on assumption basis, the assessee should not be burdened with tax liability. Adhoc disallowance on this magnitude cannot be sustained. We allow this ground of appeal and delete disallowance.- Decided in favour of assessee
|