TMI Blog1991 (12) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... was found that the assessee-company had credited a sum of Rs. 2,01,432 as amount written back in its profit loss account and this was offered for taxation in the original return filed on 11-10-1985 by the assessee. However, subsequently a revised return was filed on 17-9-1986 in which this amount of Rs. 2,01,432 was claimed as exempt. According to the assessee, these amounts are credit balances on account of purchase of goods, commission payable, etc., to various parties, and although these had been written back by the assessee as credit in the profit loss account, they are not revenue receipts and as such not liable to tax. The Assessing Officer did not accept the claim of the assessee and treated the amount of Rs. 2,01,432 as its inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt strongly relied on the order of the first appellate authority and submitted that by its own conduct of writing back these amounts in the profit loss account as a credit, the assessee has treated these amounts as trading receipts in the original return and now with a view to avoiding payment of tax the assessee is claiming that the liability in respect of these amounts has not ceased as yet. He accordingly pleaded that the order of the CIT(A) should be confirmed in this regard. 12. We have considered the rival submissions and have also perused the details of this sum of Rs. 2,01,432 which have been furnished by the assessee at pages 3 to 5 of the paper book. A perusal of the details indicates that this represents liabilities right fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber of years and which might have become barred by limitation and which have been written back by the assessee to the credit of the profit loss account. (iii) Liabilities on account of expenses which must have been debited in the earlier years to the profit loss account and for which no claim has been made by the creditors and which have been written back by the assessee to the profit loss account. 13. For the treatment of liabilities referred to in (ii)/(iii) above, the Bombay High Court in the series of decisions referred by Shri Kamat, learned Representative for the assessee, has held that the cessation of liability may occur :---- (a) by reason of the operation of law, i.e., of the liability becoming unenforceable at law by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties in the Gulf area to which the assessee has been exporting its goods. The payment of commission to foreigner is governed by the Foreign Exchange Regulation Act and permission is required from the Reserve Bank of India for making payment of commission to the foreign nationals or foreign firms. On a query from the Bench, Shri Kamat, the learned Representative for the assessee, could not state categorically as to whether any attempt has been made by the assessee to seek permission of the Reserve Bank of India for making payment of commission to the various parties as mentioned at pages 16 17 of the paper book. Admittedly, till the date of hearing of this appeal, i.e., 12-12-1991, neither the parties have demanded payment of commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account by debiting the accounts of the creditors and crediting the profit loss account. The assessee itself has shown the entries as credit to the profit loss account as its income in the original return filed by it on 11-10-1985. It is only subsequently that the assessee made a claim that the liabilities in respect of these entries have not ceased. However, this contrary position taken by the assessee in the revised return is not supported by any evidence. 14.2 It is also seen that till 12-12-1991, the assessee has not paid a single paisa towards these liabilities as admitted by Shri Kamat, the learned Representative for the assessee, during the course of hearing on a specific query put by the Bench. Thus, keeping in view the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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