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TMI Blog2019 (2) TMI 1263X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Bench of this Tribunal vide its order in ITA No. 946/Bang/2014 dated 12.04.2016 set aside the issue of addition of Rs. 9,17,410/- made in the order of assessment for Assessment Year 2008-09 dated 15.12.2010 to the file of the AO for re-examination in the light of the judgment of the Hon'ble Delhi High Court in the case of Usha Stud Agricultural Farm Ltd., (301 ITR 384); holding as under at para 4 thereof: "4. We have considered the rival submissions as well as the relevant material on record. We find that the amount in question is a brought forward balance as shown in the account of the two parties viz., M/s.Beijia Industrial Co. Ltd., and M/s.S.I.International Co., who are stated to be suppliers of the assessee. This fact has not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o prove the existence of the liability in question then the addition can be made under the provisions of sec.41(1) or sec.28 of the Act and not u/s 68 of the Act. Accordingly, we set aside this issue to the record of the AO to re-examine the same in the light of the judgment of the Hon'ble Delhi High Court in the case of Usha Stud Agricultural Farm Ltd.(supra). The assessee is also directed to explain the status of the repayment of the liability." 2.2 Consequent to the directions in the aforesaid order of the Tribunal (supra), the Assessing Officer ('AO') took up assessment proceedings afresh on the issue remanded back to his file. The AO completed the assessment proceedings ex-parte u/s 143(3) r.w.s. 254 of the Income Tax Act, 1961 (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany Ltd. Thus, the entire liability of Rs. 7,79,550/- shown by the appellant in his books of account for AY 2008-09 in respect of M/s Beijia Industrial Company Ltd stood extinguished. Since the appellant has claimed this amount as a sundry credit against M Is Beijia Industrial Company Ltd during the year, the action of the AO to add back this amount to the income of the appellant for the year is found to be correct. However, as this sundry creditor is carried over from earlier year, it cannot be added to the income of the appellant for the current year u/s 68 of the Act. Nevertheless, this addition has to be made u/s 41(1) of the Act for cessation of liability which has been carried forward from the earlier financial year 2005-06. As re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he authorities below. 3.3 I have heard the rival contentions of the learned AR for the assessee and the learned DR for Revenue, and perused and carefully considered the material on record. At the outset of proceedings, both Counsels pointed out that there was no dispute in respect of the liability of Rs. 1,37,860/- shown against M/s. S. I. International Ltd., and the amount is offered to tax as cessation of liability u/s 41(1) of the Act. In these circumstances, the finding rendered in impugned order of the learned CIT(A) on this issue in respect of Rs. 1,37,860/- is upheld and to this extent the assessee's appeal is dismissed. 3.4.1 The other sundry creditor balance is of Rs. 7,79,550/- (Rs.9,17,410/- less Rs. 1,37,860/-) pertaining to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of liability; without giving credit for the amount of Rs. 5,25,000/- paid towards clearing the sundry creditor's balance of M/s. Beijia Industrial Co. Ltd. In my view, after giving credit for the payments of Rs. 5,25,000/- as per agreement dated 10.01.2008; being the full and final amount due by the assessee to M/s. Beijia Industrial Co. Ltd; the addition u/s 41(1) of the Act on account of cessation of liability is to be sustained only to the extent of Rs. 2,54,550/- (i.e., Rs. 7,79,550/- less Rs. 5,25,000/-) and I hold and direct accordingly. Consequently, the assessee's grounds are partly allowed. 5. In the result, the assessee's appeal for Assessment Year 2008-09 is partly allowed. Pronounced in the open court on this 14th day of Nove ..... X X X X Extracts X X X X X X X X Extracts X X X X
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