TMI Blog2012 (7) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... written off in the books of account, provisions of section 41(1) cannot be applied - Deletion of addition justified - Decided in favor of assessee. - ITA No. 4646/Del/2010 - - - Dated:- 22-6-2012 - SHRI G.D. AGRAWAL, AND SHRI RAJPAL YADAV JJ. Appellant by: Shri Vikas Suryavanshi, Sr. DR Respondent by: Shri RS Singhvi, CA ORDER PER RAJPAL YADAV: JUDICIAL MEMBER The revenue is in appeal before us against the order of Learned CIT(Appeals) dated 23.08.2010 passed for assessment year 2002-03. The grievance of the revenue is that Learned CIT(Appeals) has erred in deleting the additions made by the Assessing Officer with the aid of section 41(1) of the Income-tax Act, 1961.] 2. The brief facts of the case are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d first appellate authority, assessee has filed written submissions wherein it has explained the nature of each liability and how it is still in existence. The submissions made by the assessee have been reproduced by the learned first appellate authority and the same read as under: a) Interest liability of M/s. DSIDC 16,25,572/- This liability is not in the nature of trading liability of the company as the liability is relating to loan taken from Government of India by M/s. DSIDC which was at that time a merged entity with DSMDC. However, when DSMDC was demerged into an independent entity, the assets and liability represented by loan and interest were transferred to DSMDC along with the corresponding liability and same is still appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,608 and the balance of liability is to be paid after proper reconciliation. In fact, the Assessing Officer himself has observed that the liability is deemed to be not payable and there is no specific finding that same is not payable at all or same has been written back. The finding of the Assessing Officer is without proper appreciation of facts and based on presumption and surmises. The legal principle explained above shall be relevant in respect of this item also and accordingly the addition made by the Assessing Officer is not justified and sustainable. c) Salary payable to employees Rs.3,52.278/- This amount is relating to salary payable to the employees pending final settlement of accounts. The liability on account of salary t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer being illegal, arbitrary and contrary to provisions of sec. 41(1) and principle laid down by various legal authorities explained above and as such there is no basis for any such addition. The appellant made another submission vide letter dated 28.4.06 vide which copy of account in respect of such outstanding balances have been filed. It was further submitted that DSMDC Ltd. is an associate concern of Delhi State Industrial Dev. Corporation Ltd. (DSIDC Ltd.) and same is in the process of merger with DSIDC Ltd. 6. Hon'ble Delhi High Court in the case of Vardhman Overseas Ltd. (supra) has observed that section 41(1) has been incorporated in the Act to cover a particular facts situation. Section applies where a trading liability wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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