https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=460747 https://www.taxtmi.com/caselaws?id=460747 Addition u/s 41 - Cessation of liability - HELD THAT:- In case of Sri Bimal Kumar Gupta as shown by the assessee on the liabilities side and when the sale crystallized by handing over possession of the property, the advance after adjustment of the cost was moved to the income side of the P L Account (in case if the adjustment results in surplus and when there is a deficit, it will come in the expenditure side). So, we take note that after completing the legal formalities and handing over the property during the F.Y. 2012-13, the profit from the sale of land to Sri Bimal Kumar Gupta of Rs. 34 Lakhs has been transferred to the P L Account of M/s Abir International in which the assessee is a proprietor. We note that the cost of land purchased from Dindayal Gupta of Rs. 26 Lakhs was adjusted against the advances which was duly reflected in the books as Advance paid on the asset side . So, we find that in the facts and circumstances of the case this transaction of the assessee cannot attract Section 41(1). So, therefore, there is no infirmity in the order passed by the Ld. CIT (A) and we confirm the same. Liability from M/s Kit Sales (P) Ltd. Liability shown by the assessee without being written off by the creditor cannot attract Section 41(1) of the Act as rightly held by the Ld. CIT (A) and even if advance as claimed by the assessee is found to be non-genuine from the very inspection itself, at least in terms of Section 41(1) of the Act, there is no cure for it. May be the said amount which is credited in the books of the assessee could attract Section 68 of the Act which could have been done in the year when the amount was credited in the books of the assessee i.e. in the A.Y. 2007-08, since the fact remains that the said credit entry in the books of account happened on 28.08.2006. So, therefore, we do not find any infirmity in the order passed by the Ld. CIT (A) and we dismiss the appeal of the Revenue. Liability from B. Nirupam Co. - Liabilities have been existing from a very long time and same according to the assessee are still liabilities on its books and just because the notices were unserved does not mean that there is cessation or remission of liabilities and unless there is at least a unilateral act on the part of the creditors, that they have waived off their right to receive payment or by operation of law, there should be cessation of liability, which is not the case, so, Section 41(1) of the Act cannot be applied in the facts of the case; and that Section 41(1) can be applied only when the department has allowed expenditure, loss or trading liability as deduction in a previous A.Y. and there is a benefit which has accrued to the assessee in the assessment year in question, then only Section 41(1) can get attracted. The AO has not brought anything on record to show that in the earlier years the assessee has got any deduction on account of loss, expenditure or trading liability and that in the instant assessment year got benefit by remission or cessation of it, without which Section 41(1) cannot be invoked. Crystalization of income - AO has pre-poned the income without appreciating that the assessee has offered Rs. 5 Lakhs in the next assessment year and followed the accounting standards as prescribed by the ICAI. We do not find any infirmity in the order of the Ld. CIT (A) and, therefore, dismiss this ground of appeal. Disallowance of compensation - payment in respect was disallowed, because 5 persons to whom the payments were made could not be established by documentary evidence but there were proof in the form of receipts issued by these persons who have accepted the payments towards them - AR stated that if the matter is remanded back to the file of the AO, the assessee would adduce evidence to support the claim made by him - HELD THAT:- In the light of the said submission made by the assessee in the interest of justice, we set aside the order of CIT (A) and remand this issue back to file of the AO to decide the issue afresh after granting opportunity to the assessee to bring evidence to support its claim. Addition of income - assessee failed to substantiate the source of payment made in cash for registration of some land dealing - HELD THAT:- CIT (A) was of the opinion that since the source of expenditure could not be adduced by the assessee, he confirmed the addition. Before us also the assessee could not adduce any evidence to prove the source of cash of Rs. 1,13,058/-. Therefore, we confirm the order of the Ld. CIT(A). Case-Laws Income Tax Fri, 24 Mar 2017 00:00:00 +0530