TMI Blog2015 (7) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... ds the year, there can again be little doubt in the matter. The impugned credit/s, which we have found as a fresh credit/s, is during the current year. The liability was accepted as genuine for and up to the immediately preceding year, while it is no longer payable as at the year-end. The taxable event, in terms of gain, thus, has taken place during the year, even if one considers the passing of the journal entry, recording so, on a particular (single) date in the books, to be a matter of convenience only. It is for these reasons that we find the impugned credit as corresponding and answering to the concept of income under section 2(24) and, further, as standing to fall to be assessed u/s. 56(1) and 56(2), finding strong support in the decision in the case of T.V. Sundram Iyengar [1996 (9) TMI 1 - SUPREME Court]. - Decided against assessee. Addition being the write back of earlier year expenses to the assessee’s capital account for the year - Held that:- . No taxable event has taken place in the current year, as well as, as it appears, in the past. A reversal of a wrong entry, having no income or expense implication, cannot, by any stretch of imagination, result in income. Book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name Amount (Rs.) 1 Diseto Tools Company 6,06,000 2 Balkishan Son 1,95,000 3 Vinod Corporation 80,000 4 Manisha Trading Company 1,00,000 5 Desai Corporation 1,00,000 6 Kinner Textile 95,000 7 Samir Trading Company 1,00,000 8 Shantilal Lalchand Sons 1,71,500 9 V. Navbheram Company 1,95,000 10 N Vasantrai Company 1,00,000 11 Dhanji Shivaji Bhanushali 1,50,000 12 Dhanji Bhaga Patel 2,50,000 13 Pravin Shivaji Furia (HUF) 1,50,000 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply. Reliance stands placed by it on the decision in the cases of CIT vs. P. Mohanakala [2007] 291 ITR 278 (SC) and Major Metals Ltd. vs. Union of India (in WP No. 397 of 2011 dated 22.02.2012, since reported at [2013] 359 ITR 450 (Bom)). 5. We have heard the parties, and perused the material on record, giving our careful consideration to the matter. We are, for the reasons that follow, of the considered opinion that the impugned sum is liable to be considered as the assessee s income for the current year. Income Concept Scope 5.1 Income, inclusively defined u/s. 2(24) of the Act, is a term of widest amplitude, which would include any sum in the nature of income, i.e., which corresponds with and answers the common notion of the said term (also refer para 5.4). Case law in the matter is legion (refer: CIT vs. G. R. Karthikeyan [1993] 201 ITR 886 (SC); Emil Webber vs. CIT [1993] 200 ITR 483 (SC) (also refer para 7). True, capital receipts are excepted. The reason is, again, simple. Income, by definition, is always conceived in terms of accretion to capital. When, therefore, what is received stands established as capital, there is no question of it being considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited in the books of the assessee for any previous year it may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such a case there is, prima facie, evidence against the assessee, viz., the receipt of money, and if he fails to rebut the said evidence, it can be used against him by holding that it was a receipt of an income nature. While considering the explanation of the assessee, the Department cannot, however, act unreasonably (see pp. 804H. 805A C).) [emphasis, ours] The decision in the case of Orissa Corporation P. Ltd. (supra) was also referred to by the hon'ble jurisdictional high court in Major Metals Ltd. (supra) (at pgs. 447 - 478) to emphasize that the doubtful nature of the transaction and the manner in which the sums were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advances as income, de hors the provision of section 56(2), applying the concept of income, consistent with section 2(24), in the facts of the case. The efflux of time, coupled with the write back, so that it was no longer payable, it opined, was sufficient to signify a qualitative change in the nature of the sum as one of receipt of business. The finding of it representing a trade surplus (and, therefore, assessable u/s.28), in view of the trading relationship between the parties, is, though relevant, secondary, in the larger context of the ratio/import of the decision. It may not be of much import in-as-much as it would only alter or impact the head of income under which the income stands to be assessed. The issue before us is not qua the head of income under which the impugned sum would stand to be assessed; it not being even the Revenue s case that the same is business income, assessing it as income from other sources u/s. 56, but as to the nature of the receipt, i.e., if it at all is, or represents, the assessee s income. 5.2 During hearing, the ld. counsel was specifically questioned by the Bench that even assuming, without admitting though, the sums under reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex court found the write back to be assessable u/s.28 as business income in the case of T.V. Sundram Iyengar (supra). 5.3 The non-application of section 41(1), or as the case may be, section 59(1), which would apply only where the Revenue has discharged the onus of showing the impugned sums to have been allowed deduction in the assessment for any earlier year, is absent in the instant case. This, however, would be of little moment. Conclusion 5.4 We, for the reasons afore-stated, confirm the assessment of the impugned sum as income, which would, in the absence of the establishment of the cause of remission or cessation of liability, fall to be assessed under Chapter IV-F under the head income from other sources u/s. 56. We have, while discussing the taxability, also made abundant reference to section 68. The assessee s own accounts reflect the impugned sums as amounts payable , from year to year, for the past several years. Her stand of the sum/s as representing a liability was accepted. She now states, through the write back of the same, to be no longer so, without any explanation. It is nobody s case that these were not actual, but fictitious liabilities. Again, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular (single) date in the books, to be a matter of convenience only. It is for these reasons that we find the impugned credit as corresponding and answering to the concept of income under section 2(24) and, further, as standing to fall to be assessed u/ss. 56(1) and 56(2), finding strong support in the decision in the case of T.V. Sundram Iyengar (supra). 6. The subject matter of Ground II is an addition in the sum of ₹ 3,03,424/-, being the write back, as stated, of earlier year expenses, to the assessee s capital account for the year. The amount being not offered as income per the return, the same was brought to tax as income from other sources u/s. 56(1), in view of the non-substantiation of her stand by the assessee. In the appellate proceedings, it was again reiterated that the write back was on account of erroneous entries made by the appellant in her books for the earlier years, and the impugned entry was only by way of a rectification entry, not leading to any income, much less chargeable to tax. The matter was subject to a remand report by the A.O., who endorsed his earlier view, stating the assessee to be entitled to an income in the impugned sum towards godown r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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