TMI Blog2018 (5) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.143(3) of the IT Act. 2. Following grounds have been taken by the Revenue:- 1. Whether on the facts and in the circumstances of the case and inlaw, the Ld. CIT(A) was justified in deleting the addition of ₹ 49,95,5007 -made by the AO u/s 50C of the IT Act without appreciating the fact that the leasehold land is a capital asset as has been decided by the Hon'ble Delhi High Court in the case of Teletube Electronics Ltd Vs. CIT(2015)61 Taxmann.com 350(Delhi) the Hon'ble ITAT, Lucknow in the case of ITO Vs Shri Hari Om Gupta in ITA No. 222/LKW/2013. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition made by the AO u/s 41(1) of the IT Act without appreciating the fact that during the course of assessment proceedings the assessee failed to file any information/correspondence from the said creditors in respect of their claims, which are pending in the assessee's books for a long period. 3. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the Assessing Officer be restored. 4. The appellant craves leave to amend or alter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus, an addition of ₹ 7,52,781/- is made to the total income of the assessee u/s 41(1) of the ITAct,1961, thereafter applied provisions of Section 50C and made an addition of ₹ 2,66,12,234/-. 4. By the impugned order, CIT(A) deleted the addition after observing as under:- 5.1.1. Through this ground the appellant objected the AO s action of applying provisions of section 50C of the IT Act on transfer of leasehold rights by the appellant and thereby making addition of ₹ 49,95,500/-. The second ground is without prejudice ground. The AO discussed this issue at para-5 of his order. 5.1.2. At para-5.1, the AO observed, During the year under consideration, the assessee has sold immovable property viz. leasehold land situated at Plot No.H-2 in Tarapur Industrial area.... Thus, it is clear that the AO himself has not disputed that the transaction was in respect of lease hold land . He has also not given any justification for treating the same as capital asset. 5.1.3 Under the circumstances, I find that the ratio of Hon'ble ITAT Mumbai in the case of Atul G Puranik vs ITO, 11 Taxmann 92 cited by the appellant applies with full force in the instan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal, then a subsequent decision following the earlier decision cannot be challenged. Further, it is not the Revenue's case before us that there are any distinguishing features either in facts or in law in the present appeal from that arising in the case of Atul Puranik (supra). 5. In the above view, the question as framed by the Revenue does not give rise to any substantial question of law. Thus, not entertained. 6. Learned DR fairly conceded that issue is covered by the Bombay High Court. Accordingly, we do not find any reason to interfere in the order of CIT(A) for deleting the addition made u/s.50C of the IT Act. 7. During the course of assessment, the AO has also made an addition u/s.41(1) which was deleted by CIT(A) after observing as under:- 5.3.1 This ground pertains to the addition of ₹ 7,52,781/- u/s 41(1) of the IT. Act. I find that identical issue was decided by Ld. CIT(A);s vide order No.CIT(A}-7/ ACIT-3(3)/IT-199/11-12 dated 23.05.2012 for A.Y. 2009-10. The relevant extracts from CIT(A)'s order are reproduced hereunder- I also find that the AO merely invoked the provisions of section 41(1) of the Act based on the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 7.29 crores originated in assessment years 1997-98 to 2002-03 and continuing unchanged till the impugned assessment year. Therefore, the AO has assessed the liability since it continued in the books of account of the assessee for such a long period without being paid off by the assessee hence, such liability have ceased to exist and to be treated as income of the assessee. He further held that the assessee has failed to prove genuineness of the sundry creditors by furnishing the confirmations or any other documentary evidences. As far as the second allegation of the AO is concerned, we are unable to accept the same. When the AO accepts that the liabilities were created in assessment years 1997-98 to 2002-03, the genuineness of such transactions have to be examined in those assessment years and not in assessment year under consideration. The sundry creditors shown by the assessee in the year of origin having been accepted by the department, the genuineness of such transactions cannot be called into question in the impugned assessment year. As far as the allegation of the AO that liability on account of sundry creditors has ceased to exist in the assessment year in terms of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be held to be an afterthought but has to be considered to have been done in good faith. Moreover, a part of the liability is due to Government agencies. Unless there is any communication by the Government giving tie-up its right to recovery of the debt there cannot be remission of the liability. The Hon ble Delhi High Court in the case of Jain Exports (P) Ltd (supra) held as under : 21. Although, enforcement of a debt being barred by limitation does not ipso facto lead to the conclusion that there is cessation or remission of liability, in the facts of the present case, it is also not possible to conclude that the debt has become unenforceable. It is well settled that reflecting an amount as outstanding in the balance sheet by a company amounts to the company acknowledging the debt for the purposes of Section 18 of the Limitation Act, 1963 and, thus, the claim by M/s Elephanta Oil Vanaspati Ltd. can also not be considered as time barred as the period of limitation would stand extended. Even, otherwise, it cannot be stated that M/s Elephanta Oil Vanaspati Ltd. would be unable to claim a set-off on account of the amount reflected as payable to it by the assessee. Adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s since past several years from the relevant assessment year and at no point of time earlier the Assessing Officer doubted the creditworthiness and/or identity. In any case the addition on the aforesaid ground under Section 41(1) of the Act cannot be made unless and until it is found that there was remission and/or cessation of the liability that too during the previous year, relevant to the assessment year in question, there cannot be any addition invoking the provision of Section 41(1) of the Act. Identical question came to be considered by the Division Bench of this Court in the case of Nitin S. Garg (supra) and in the similar set of facts and circumstances of the case when the addition was made invoking Section 41(1) of the Act by doubting the creditworthiness and/or identity of the sundry creditors mentioned in the balance sheet and it was found that those sundry creditors were very old and no interest had been paid on those loans, the Division Bench has deleted such addition made under Section 41(1) of the Act. In paragraph 15 the Division Bench has observed and held as under; 15. In the case before us, it is not been established that the assessee has written off the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parte and in that view of the matter, the assessee would be allowed to contest such findings. Nevertheless, even if such facts were established through biparte inquiries, the liability as it stands perhaps holds that there was no cessation or remission of liability and that therefore, the amount in question cannot be added back as a deemed income under section 41(c) f the Act. This is one of the strange cases where even if the debt itself is found to be non-genuine from the very inception, at least in terms of section 41(1) of the Act there is no cure for it. Be that as it may, insofar as the orders of the Revenue authorities are concerned, the Tribunal not having made any error, this Tax Appeal is dismissed. In the present case there was no remission and/or cessation of the liability during the previous year relevant to the assessment year under consideration. As such, there is no remission and/or cessation of the liability during the year under consideration subject to the conditions contained in the statute being fulfilled. In the present case, both the aforesaid elements are missing. 9. Thus, applying the ratio laid down in the aforesaid decisions to the facts of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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