TaxTMI 
TaxTMI 
2015 (7) TMI 357
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....um of Rs. 1,60,000/- being salary payable. iii) On the facts of the case, the Ld. CIT(A) erred in confirming an amount of Rs. 1,19,928 received from the Director as a violation of Section 269SS of the Act." 2. The Brief facts of the case are that the case of the assessee was selected for scrutiny and during assessment proceedings, the A.O. observed that he assessee had made certain payments to professionals without deduction of TDS in accordance with the provisions of Section 194J and, therefore, he disallowed the payment u/s 40(a)(ia) of the Act and he disallowed an amount of Rs. 4,28,675/-. The A.O. further observed that the assessee in its balance sheet had reflected a provision of Rs. 1.80 lacs on account of salary payable. He further....
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....or Shipping Services Pvt. Ltd. 355 ITR 642. Regarding the 2nd ground of appeal, Ld. A.R. submitted that the provisions were outstanding in the books of account and it was not written back by the assessee and, therefore, the provision of Section 41(1) were not applicable. As regards the 3rd addition for violation of the provision of Section 269SS, Ld. A.R. submitted that the assessee had not accepted the loan in cash and rather the director had directly paid to Hundai Motors and assessee had just passed a journal entry by crediting the amount to the account of Directors and therefore there was no violation of the provisions of Section 269SS. Reliance in this respect was placed on the case law of CIT Vs Worldwide Townships Projects Ltd. decid....
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....al is decided in favour of assessee and is therefore, allowed. 6. Regarding 2nd ground of appeal, with respect to addition u/s 41(1), we find that various courts have decided that addition u/s 41(1) can only be made if the provisions of liability are written back in the P & L account and in the absence of such write back, addition u/s 41(1) cannot be made. It is undisputed fact that provisions were not written back and were outstanding in the balance sheet and reflection of such liabilities in the balance sheet itself proves that liabilities had not ceased and therefore, provisions of Section 41(1) were not applicable. In view of above, ground No.2 of the appeal is also allowed. 7. As regards 3rd grievance for violation of the provisions ....
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....ii) of the explanation of Section 269SS of the Act which defines loan or deposit to mean "loan or deposit of money". The liability recorded in the books of accounts by way of journal entries, i.e. crediting the account of a party to whom monies are payable or debiting the account of a party from whom monies are receivable in the books of accounts, is clearly outside the ambit of the provision of Section 269SS of the Act, because passing such entries does not involve acceptance of any loan or deposit of money. ' In the present case, admittedly no money was transacted other than' through 'banking channels. M/s P ACL India Ltd. made certain payments through banking channels to land owners. This payment made on behalf of the assesse....