TMI Blog2016 (7) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... lant & machinery’ within the period of 8 years from the date of creation and for not filing any evidence by the assessee - Held that:- Sub-Section (1) of Section 32A is clear that there shall be a deduction equal to the 25% of actual cost of machinery or plant installed in the immediately succeeding previous year that in respect of investment reserve created for the business purpose. Sub-Section (6) of Section 32AB defines that if, said investment reserve is not utilized within the specified time and the same is deemed to be profit and gain of business of that previous year. In the present case, the said amount appears to be created in the A.Y 1997-78 debiting to the P & L account and there was no dispute that the factory of assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent : Shri R.P Das, FCA, ld.AR ORDER SHRI S.S.VISWANETHRA RAVI, JM This appeal of the revenue arises out of the order of the CIT(A)-XXX, Kolkata in Appeal No. 152/CIT(A)-XXX/Wd-10(1)/2011-12 dated 20-11-2012 for the assessment year 2007-08 against the order of assessment framed u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The revenue has raised the following grounds of appeal :- 1) On the facts and in the circumstances of the case Ld. CIT(A) has erred in holding that the liability of the assessee in respect of wages has not ceased to exist. 2) On the facts and circumstances of the case Ld. CIT(A) has erred in holding that liability in respect of Investment Allowance R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Appeal proceedings. After considering the submissions of the assessee, the CIT-A has opined as under: 2.2 The submissions of the Appellant have been considered and it is seen that the said liability i.e. miscellaneous liability mentioned by the AO is on account of unpaid wages etc. i.e the prior period expenses the total of which was ₹ 22,18,360/- as on 31-3-2007 and that the details of the same had been filed before the AO. It is further seen that there was no complete cessation, as the amounts are still payable to the workers by the Appellant company and the claims for which has not been forgone by the claimant i.e. the workers. Therefore the same cannot be considered as cessation of liability even if recovery is barred by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led before the AO. The Ld. AR of the assessee drew our attention to page no.3 of the paper book and conceded no objection in remanding the issue to the file of AO for verification. 7. We find that the details of relevant liabilities were not produced by the assessee before AO and the same furnished before CIT(A) for the first time were relied upon by him to give relief to the asessee without giving any opportunity to AO. There is, therefore, violation of Rule 46A and this position is not disputed even by Ld. A/R. We, therefore, set aside the matter to AO. Accordingly, ground no.1 is allowed for statistical purposes. 8. Regarding ground no-2, the AO found that an amount of ₹ 10,50,000/- under the head investment allowance reserve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Profit Loss/trading liability. Further in view of the. decision of the decision of the Kolkata High Court in CIT Vs. A. Tosh Sons (P) Ltd., supra where the Hon'ble High Court has held that the assessee having, never claimed any deduction in respect of sums credited in P L Account provision of section 41(1) could not be applied. Therefore the addition of this amount u/s 41(1) by the A.O is not justified because the 'Reserve' was not created by an allowance or deduction in any year in respect of any Loss, Expenditure or Trading Liability incurred by the Appellant. Therefore the addition made by the AO is not justified and the same is deleted (Relief ₹ 10,50,000/-). 10. Before us, the Ld. DR submits that as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s deemed profit and gain of business of the year under consideration i.e 2007-08 under Sub-Section (6) of Section 32AB of the Act and the addition under section 41(1) of the Act can not be applied taking into consideration that the assessee was not claimed any deduction in respect of amount ₹ 10,50,000/- under the head investment allowance reserve credited to Profit Loss account, Therefore, we find no infirmity in the order of CIT-A in finding that the addition of amount ₹ 10,50,000/- u/s 41(1) of the Act by the A.O is not justified as the investment reserve was not created by an allowance or deduction in any year in respect of any Loss, Expenditure or Trading Liability incurred by the assessee. Thus, ground-2 fails, according ..... X X X X Extracts X X X X X X X X Extracts X X X X
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