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2016 (7) TMI 691 - ITAT KOLKATA

2016 (7) TMI 691 - ITAT KOLKATA - TMI - Liability in respect of wages - assessee's failure to furnish the details of such miscellaneous liabilities - Held 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, s .....

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ar 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 was taken over by the Bihar State Financial Corporation on 01 .....

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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 .....

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is 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 ce .....

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L income through its return of income filed on 08-01-2008. 4. During the course of assessment that the assessee has shown liability of ₹ 42,48,307/- under Schedule-7 in audited balance sheet out of which AO found that the ₹ 22,18,360/- as other miscellaneous liabilities. The finding of the AO was that the assessee failed to furnish the details of such miscellaneous liabilities. He added the same by treating it ceased liability. 5. In appeal before the CIT-(A), the assessee submitted .....

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rker in accordance with a detailed list prepared as outstanding a copy of which examined and acknowledged by the CIT-A in the course 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 .....

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e Appellant wherein it was held that even though recovery of any claim wages was barred by limitation, legally debt subsisted and hence there was no cessation of liability. The amount therefore, could not be added to the income. Further the facts in the case of the Appellant wherein it is seen that the liability is towards the workers etc. and is still existing therefore there is no cessation of liability. Accordingly considering the facts in the case of the Appellant and the decision in the abo .....

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which CIT(A) has given relief to the assessee, which is against to the procedure contemplated under Rule 46A of the I.T Rules 1962 and prayed to send back the issue to the file of the AO for verification of such details, in turn, the ld.AR of the assessee also submits, in fact, all the details were available before the AO, but could not note down on which date it was filed 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 rem .....

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egarding ground no-2, the AO found that an amount of ₹ 10,50,000/- under the head investment allowance reserve and. The AO added the same by treating it ceased liability on the ground that the amount of Reserve has not been utilized for acquiring plant & machinery within the period of 8 years from the date of creation and for not filing any evidence by the assessee. 9. On appeal, the CIT(A) after considering the submissions of the assessee held as under:- 3.1 In Appeal it has been subm .....

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ta High Court in CIT Vs. A. Tosh & Sons (P) Ltd. in 107 CTR 233. The Appellant also filed photocopy of Audited Accounts for Financial Years 1975- 76 as well as 2006-07 indicating the "Reserve and Surplus" and current liability. 3.2 The submissions of the Appellant have been considered and it is seen that the Reserve in question i.e. the Investment Allowance, Reserve was not created by a deduction or claim in the Profit&' Loss Account. Therefore the addition made by the AO u .....

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he 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 per section 32A which under dispute is discontinued. It ceased to exist. However, he relied on the order of the A .....

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