TMI Blog2022 (10) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... en off by the Appellant Company in its books of account. We do not see any infirmity in the order passed by the Ld.CIT(A) in deleting the addition made u/s 41(1) of the Act. Thus, we sustain the order of the Ld.CIT(A) and reject the grounds of Revenue on this issue. - I.T.A No.6428/Del/2018 - - - Dated:- 30-9-2022 - Shri Anil Chaturvedi, Accountant Member And Shri Challa Nagendra Prasad, Judicial Member For the Assessee : None For the Revenue : Shri Vipul Kashyap, Sr. DR ORDER PER C.N. PRASAD, J.M. This appeal is filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-5, Delhi dated 26.07.2018 for the AY 2013-14 in deleting the disallowance of unsecured loans from directors and promoters amounting to Rs.1,39,51,852/- made u/s 68 of the Act and deleting the addition made u/s 41(1) in respect of outstanding sundry creditors of Rs.15,81,908/-. 2. In spite of issue of notice fixing the date of hearing on several dates none appeared on behalf of the assessee nor any adjournment was moved. We disposed off the appeal on hearing the Ld. DR on merits of the addition/disallowance made by the Assessing Officer. 3. With regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of unsecured loans given and received during the year. The appellant company categorically explained that during the year under assessment they have not so far received any fresh unsecured loans either from the directors, promoters or from other persons if any, as there appears to be the opening balances of the same in their books of accounts as on 01.04.2012, which has been shown/proved from their statement of accounts filed and possessed by the AO for the year under assessment in his records, which were re-paid/cleared subsequently on 12.04.2013, as per the copy of bank statement filed and placed upon records during the course of assessment proceedings, as such the additions made were suffers from infirmity as laconic and ironic in nature, therefore, liable to be deleted and may please be deleted accordingly. From the copies of accounts submitted it is seen all the outstanding balance were paid back on 12.04.2013. These were the opening balance on 01.04.2012 were unchanged for all these accounts during the year under reference that i.e. FY 2012- 13. The factual position of the loans having been paid back is also on record. In these circumstances the AO was not justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore than 3 years he was of the view that there is no indication that the assessee intends to pay the liabilities, treated the same as income of the assessee invoking the provisions of Section 41(1) of the Act as the liabilities are no longer payable. The Ld.CIT(A) deleted the addition following the decision of the Hon ble Delhi High Court in the case of Vardhaman Overseas Ltd. (343 ITR 401) observing as under: 4.3 Ground No. 2: The next addition is with reference to static creditors which have been added back u/s 41(1). The AO in his order has noted that the appellant had no intention to clear the balance of creditors outstanding in the books and there was no effort of recovery from the said creditors. These creditors were outstanding for a period of more than 3 years in the hands of the appellant company. Consistent legal position in this regard is that an addition u/s 41(1) can be made only when the amount have been written off by the appellant company in its books of accounts. The judgment of Delhi High Court in Vardhaman Overseas Ltd. 343 ITR 401 is basically clear on this account. The operative part of the judgment is quoted hereunder: 11. The question before us is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r years and above the assessee had obtained some benefit in respect of the trading liability which was earlier allowed as a deduction. There is no dispute in the present case that the amounts due to the sundry creditors had been allowed in the earlier assessment years as purchase price in computing the business income of the assessee. The second question is whether by not paying them for a period of four years and above the assessee had obtained some benefit in respect of the trading liability allowed in the earlier years. The argument of the L. Standing Counsel that the non-payment or non-discharge of the liability in favour of the sundry creditors resulted in some benefit in respect of such trading liability in a practical sense or common sense and, therefore, the section was rightly invoked, with respect, overlooks the words following the above quoted words, namely, - by way of remission or cessation thereof. As a matter of construction, it seems to us that it is not enough that the assessee derives some benefit in respect of such trading liability, but it is also essential that such benefit arises by way of remission or cessation of the liability. The words in clause (a) vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
