TMI Blog2022 (9) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... ct by the assessee in writing off of liability in its books of accounts. In order to attract the provisions of section 41(1) there should have been an irrevocable cessation of liability without any possibility of the same been revived, which has not so been established by the Revenue. Addition on account of sundry creditors is not sustainable in the year under consideration and therefore, is directed to be deleted. As a result, grounds raised by the assessee are allowed. Addition on account of advances received by the assessee - HELD THAT:- AO did not agree with the plea of the assessee on the basis that some of the loans received from family members were in respect of the film produced by the assessee and therefore the said advances should have been adjusted against the loss incurred on the release of said film - in absence of details of shows not being held, the AO added the advances in respect of such shows. CIT(A) vide impugned order agreed with the submission of the assessee on the basis that loans/advances cannot be considered as the income irrespective of the operations of the company resulting into profit or loss. In the present case, it has not been denied that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e additions of this sum may kindly be deleted. 3. The appellant prays that the various grounds of appeal be admitted and allowed. 4. The only grievance of the assessee in its appeal is against the addition made on account of cessation of liability under section 41 of the Act. 5. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is an entertainment firm, which is, inter-alia, engaged in production of films, TV serials, celebrity management, event management services and such other activities. For the year under consideration, assessee filed its return of income on 30/09/2009 declaring total loss at Rs. 2,27,054. During the relevant assessment year, no business activities were carried on by the assessee. During the course of assessment proceedings, details were sought by the Assessing Officer in respect of sundry creditors amounting to Rs. 1,04,70,535. In reply, assessee submitted that the said sundry creditors are mostly in respect of film Maine Dil Tujko Diya. The assessee further submitted that since there was heavy loss after release of the film, payments could not be made to the creditors. The Assessing Officer vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there is nothing available on record to show that Revenue had ever doubted the genuineness of said liability in previous years. For the application of section 41(1) of the Act, it is necessary that the assessee must have obtained some benefit in respect of such trading liability by way of remission or cessation thereof. As per provision of section 41 of the Act, such remission or cessation of liability also includes unilateral act of writing off such liability in the books of accounts by the assessee. The Revenue without bringing anything on record that the assessee has received some benefit in respect of said trading liability, during the year under consideration, treated the same to be ceased and considered it to be income of the assessee. Thus, we are of the considered view that in absence of any material to establish that the assessee has obtained any benefit in respect of the liability on account of sundry creditors, merely on surmises and assumptions it cannot be assumed that there is remission or cessation of liability in the year under consideration. More so, when there is no unilateral act by the assessee in writing off of liability in its books of accounts. In order t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. In appeal, learned CIT(A) vide impugned order allowed the appeal filed by the assessee on this issue. Being aggrieved, the Revenue is in appeal before us. 12. During the course of hearing, learned AR submitted that these loans/advances are reflecting in the books of accounts of the assessee since assessment year 2003 04. The learned AR further submitted that in respect of certain loans, which were taken from the family members, the creditors have shown these advances as receivables. In respect of the advances received on account of certain shows/events, learned AR submitted that due to some legal dispute the said shows/events could not happen till date and are soon as the said shows/events will be held the advances will be considered as income. On the other hand, learned DR vehemently relied upon the findings of the Assessing Officer. 13. We have considered the rival submissions and perused the material available on record. During the year under consideration, assessee had shown following advances received from distributors/presenters/events, in its books of accounts: a) Salman Khan (Presenters) MDTD R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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