TaxTMI 
TaxTMI 
2013 (2) TMI 523
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....on account of disallowance of claim of non-genuine creditors, especially when the trading liabilities shown by the assessee were either not confirmed by the respective creditors or could not be verified for lack of any details submitted by the assessee? 2. We have heard learned counsel for the Revenue and perused the orders on record. For the assessment year under consideration namely, assessment year 2002-2003, Assessing Officer during the course of assessment found that in balance sheet of assessee, assessee has shown creditors of Rs.52.53 lakhs(rounded off) which included number of creditors brought forward from earlier years and were shown as outstanding even in later returns furnished by the assessee including the year 2004-2005. ....
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....me-tax v. Silver Cotton Mills Co. ltd. reported in 2002 (254) ITR 728 and in case of Commissioner of Income-tax v. Chetan Chemicals Pvt. Ltd reported in 2004 (267) ITR 770. 4. Having considered the materials on record, we are of the opinion that Tribunal committed no error. Tribunal in its order has recorded as under: 9. We have heard both the parties and gone through the facts of the case as also the decisions relied upon. The provisions of sec.41(1)(a) stipulated that where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee and subsequently during any previous year, the assessee obtains whether in cash or in any other manner whatsoever,....
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....ase of Sugauli Sugar Works(P) Ltd. (1999) 236 ITR 518 SC, Hon'ble jurisdictional High Court further held that unless there is a cessation of liability or there is a remission of liability by the creditor, the liability subsists and therefore, even if the entries are made to write back the expenditure, the amount so written back cannot be added in the income of the assessee as per the provisions of section 41(1) of the Act. (9.4) Hon'ble Supreme Court in the case of Sugauli Sugar Works(P) Ltd. (1999) 236 ITR 518 held that unless there is a cessation of liability, income cannot be added as per the provisions of section 41(1) of the Act. Similarly, Hon'ble Gujarat High Court in the case of CIT vs. Chetan Chemicals Pvt. Ltd. 267 ITR 770 (Guj....
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....hat the assessee Company was carrying on business of obtaining loans and that the remission of such loans by the creditors of the Company was a benefit arising from such business." 9.5 In the light of view taken by the Hon'ble Supreme Court and Jurisdictional High Court in the aforesaid decisions, it is apparent that unless there is a cessation of liability or there is a remission of liability by the creditor, the liability subsists and, therefore, even if the entries are made to write back the expenditure, the amount so written back cannot be added in the income of the assessee as per the provision of section 41(1) of the Act. In the instant case, there is nothing to suggest that the assessee has obtained any benefit either by way of re....