9911796707
TMI Blog2023 (1) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... ter referred to as 'the Act'], dated 19/12/2018. The assessee has raised the following grounds: "1. The Commissioner of Income-tax(Appeals) has grievously erred in law and on facts in confirming the addition of Rs.15,95,250/- u/s. 41(1) of the Act without appreciating the facts that Liability is for Capital Expenditure incurred in A.Y.2011/12, the Liability was not waived and Liability written off in A.Y.2019/20 by returning the disputed machinery. The addition of Rs.15,95,250/- should therefore be deleted. The appellant reserves the right to add, alter, modify, amend or withdraw any of the grounds of appeal before hearing." 2. Brief facts of the case are that the assessee is a private limited company, is engaged in the business of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excluded in the fixed asset. The assessee has given two reasons without any movement in the ledger, these two ledgers alone are inadequate to support the claim of assessee. The Assessing Officer held that assessee has not established his claim of sundry creditor is capital in nature and thereby as it Rs.15,95,250/-, in the income of assessee. 4. Aggrieved by the addition in the assessment order, the assessee filed appeal before the ld. CIT(A). The appeal of assessee was adjudicated by NFAC, Delhi/ [ld CIT(A)]. Before NFAC, the assessee filed its submissions. The submissions of assessee is recorded in para 4 at page no. 2 to 6. The assessee in its submission reiterated that they have purchased machinery from supplier M/s. Sabko Emerystone & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on allowed earlier in case of remission of such liability. The assessee further reiterated that machinery was defective, it was never put to use supplier was instructed to take back this machinery. The assessee never claimed the depreciation on such machinery in any of assessment years. 5. The ld. CIT(A) after considering the submission of assessee held that the assessee claimed that amount in respect of purchase machinery that is capital gains. However, one hand, the amount was shown outstanding, on the other hand, the assessee claimed that the machinery was defective and it would not use. The machinery was never added to the fixed assets schedule nor any depreciation was claimed. The ld. CIT(A) held that basic accounting principle, of do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own in the books of assessee are not on account of trading liability. The assessee has purchased machinery from Sabko Emerystone & Engineering Industries Pvt. Ltd., the tax invoices of such machineries are at page nos.50 to 51 of the paper book. Such machineries were defective. The machinery was never put to use. The assessee never claimed depreciation on such machineries. The supplier was asked to remove/take back the delivery of such machineries. Since, the liability was not on account of trading liability and the assessee has not claimed such expenditure many of the years, therefore, no addition can be made under section 41 of the Act. The ld. AR submits that grounds of appeal raised by assessee is squarely covered by the decision of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustries Pvt. Ltd. (supra) shown that it is running account. I find that lower authority has not disputed about the purchase of machinery. No adverse evidence is brought on record that the liability is other than purchase of machinery. Thus, the credit in the books is not on account of trading liability. The expenditure incurred and purchases of machinery are certainly a capital expenditure. Further, the assessee has never claimed depreciation on such machinery. The Hon'ble Apex Court in the case of CIT vs Mahindra & Mahindra (supra) held on a perusal of section 41(1), it is evident that it is a sine qua non that there should be an allowance or deduction claimed by the assessee in any assessment for any year in respect of loss, expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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