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TMI Blog2016 (10) TMI 489X X X X Extracts X X X X X X X X Extracts X X X X ..... les Pvt. Ltd. (Rs.1,81,251) are unjustified as the appellant has not obtained any amount/benefit in any manner by way of remission/cessation of trading liability continues in Books of accounts of the appellant. 2. Firstly, the above appeal was rejected by the Coordinate Bench vide its order dated 4th February 2016 on account of non-appearance and thereafter, said order of the Coordinate Bench was recalled by the subsequent order of the Coordinate Bench dated 24 June 2016 and hence, the present appeal before us. 3. During the course of hearing, the ld. AR didn't press for ground no. 1. Hence, the ground no. 1 is dismissed as not pressed. 4. In respect of the second ground of appeal, the ld. CIT(A) has given his finding as under: "I have considered the contentions of the appellant as well as assessment order. It is seen that the appellant has claimed that assessee has not deducted the tax at source against the above payments to the truck owners as Form No. 15-I was received from these persons and they have filed their returns. However it is noted that as per provisions of the Sec. 194C, second and third proviso reads as under: "Provided further that no deduction shall be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding retrospective applicability of second proviso to sec. 40(a)(ia) introduced by the Finance Act 2012, this Bench has recently held in case of Kanhaiyalal Kalyanmal, Jaipur vs. DCIT, Circle-6, Jaipur ITA No. 172/JP/16 dated _______ the same to be retrospective in nature. The relevant findings are as under: "2.5 We have heard the rival contentions and perused the material available on record. The Hon'ble Supreme Court in Hindustan Coca Cola Beverage Pvt. Ltd (supra) has held that where deductee, recipient of income, has already paid taxes on amount received from deductor, department once again cannot recover tax from deductor on same income by treating deductor to be assessee-in-default for shortfall in its amount of tax deducted at source. 2.6 The decision of Hon'ble Punjab and Haryana High Court in case of PMS diesel (supra) is in the context of applicability of provisions of section 40a(ia) to amount paid/payable during the financial year and thus doesn't support the case of the Revenue. 2.7 Regarding decision of Hon'ble Kerala High Court's decision in the case of Thomas George Muthoot(supra) and Hon'ble Delhi High Court in case of Ansal Land Township Pvt. Ltd. (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the said company during February and March 2001 vide 17 bills totalling to Rs. 3,16,555/- on credit. Due to quality variations, disputes arose with the supplier M/s Tirupati Balaji Minerals Pvt. Ltd. Despite repeated request the company did not respond even Once. Unsettled disputes has led to non payment of the bills by the appellant company of Rs. 316553/-. Since F.Y. 2000-01, the amount of Rs. 3,16,553/-appears as outstanding due to the creditors in the appellant company's successive Balance sheets. As till date the amount has not been paid & the appellant company does not intend to not to make payment, the amount was continuously appeared in creditors list in the Balance sheet of the appellant company. Ld. AO has verified and approved the credit appearing in appellant companies final accounts in last A.Y. 2006-07 when he had passed scrutiny assessment order dated 17.11.2008. The appellant company has not obtained in cash or in any other manner any amount or any benefit etc. from any person regarding the purchases made by the company in the F.Y. 2000-01. It is neither the case that the appellant company has written off the outstanding dues in its books of accounts by crediting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly submit that no opening as well as closing balance is lying with Shree Padmavati Marbles Pvt. Ltd. Further this is to submit that there is no transaction with this concern since 5-7 years." Derivation: - There was no transaction with the appellant company since 5-7 years. This fact also does not mean that the appellant company has received any benefit in Previous year 2006-07 which leads to deeming income under section 41(1). Letter dated. 22.11.2009 - Extract reproduced: "During the F.Y. 2006-07 no account of Shree Padmavati Marbles Pvt. Ltd. is appearing in our books of accounts as there is no transaction with this party since 7 years." Derivation: (a) No such amount is due from the appellant company since long back and no transaction since last 9 years. (b) During the F.Y. 2006-07 no account is appearing in the creditor company's Books as there is no transaction with the company since 7 years implying that there is no write off has been made by the creditor company in F.Y. 2006-07. Thus no amount is chargeable under section 41(1). As the appellant company had purchased goods on credit in F.Y. 2000-01 and has not paid the outstanding till date, it can be reasonably ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eable to tax u/s 41(1). The AO has not clearly discharged the onus of proving that deduction has been made in the assessment for any year. We are enclosing herewith the Trading & Profit and Loss Account alongwith details of closing stock for the year ending 31.03.2004 which will leave no doubts as to fact of non deduction of amount of Rs. 1,81,251/-. In various judicial pronouncements, it has been repeatedly held that unless it is proved that an allowance or deduction has been made in the assessment in any previous year, it is not open to the Revenue to invoke section 41(1). Reliance is placed on the decision in case of Tirunelveli Motor Bus Service Co. Pvt. Ltd. vs. CIT (1970) 78 ITR 55 (SC). Further, in steel and General Mills Co. Ltd vs. CIT (1974) 96 ITR 438 (Delhi) it has been held that burden lies upon the department to prove that an allowance or deduction had been given for this amount to the assessee in the earlier Assessment Years. 5.4 The ld CIT(A) has given his finding as under: "I have considered the contentions of the appellant as well as the assessment order. It is seen that assessee has shown the following creditors in his account: (i) M/s Tirupati Balaji Miner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is a matter where the creditor has taken some unilateral steps whereby it is not demanding or pressing for such payment. The reason could be unilateral write off of old outstanding amounts as not recoverable from the assessee or due to some accounting mismatch as claimed by the assessee. The fact remains that the creditor is no more demanding any such amount from the assessee and has confirmed the same to the Assessing officer. In light of these facts, it is a clear case of unilateral remission of liability in the hands of the assessee. 5.6 The next question that arises for consideration is whether such unilateral remission of liability can be brought to tax in the hands of the assessee for the year under consideration under the provisions of section 41(1)(a) as invoked by the Assesing officer and confirmed by the ld. CIT(A). It would be relevant to examine the provisions of Section 41(1)(a) which states as under: Sec. 41 Profits chargeable to tax: (1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the first-mentioned person) and subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Marbles Ceramics u/s 133(6) of the Act. All these facts lead the Assessing officer to treat the amount as taxable under section 41(1)(a) of the Act. There is however no evidence to support the proposition that there is a unilateral action on the part of the creditor in terms of remission of liability unlike the case of M/s Tirupati Balaji Minerals Pvt ltd. Further, the assessee continues to show the liability in its books of accounts and has also not done any unilateral write off in its books of accounts. In such situation, merely because the amount is outstanding since 2003, it cannot be inferred that the liability has ceased to exist and the assessee has obtained any benefit by way of remission or cessation of its trading liability. There has to be some positive evidence or action on the part of the assessee or the creditor to support the theory of remission or cessation which is apparently not present in the instant case. Having said that, we donot feel the necessity to examine the contention of the assessee that since the purchases are included in the closing stock, there has been no deduction that has been claimed by the appellant. We leave this contention open. Hence, in lig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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