TaxTMI 
TaxTMI 
2016 (1) TMI 535
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.... has raised following grounds of appeal :- 1. The ld. CIT(A)-XIV, Ahmedabad has erred in law and on facts in allowing the depreciation on machinery purchased from group of companies amounting to Rs. 7,25,013/-. 2. The ld. CIT(A)-XIV, Ahmedabad has erred in law and on facts in deleting the addition of Rs. 59,24,478/- made by the Assessing Officer on account of Cessation of liability u/s 41(1) of the Act, in respect of unproved creditors. 3. On the facts and in the circumstances of the case, the ld. CIT(A)-XIV, Ahmedabad ought to have upheld the order of the Assessing Officer. 4. It is therefore, prayed that the order of the ld. CIT(A)-XIV, Ahmedabad may be set aside and that of the order of the Assessing Officer be restored. 4. Briefly stated the facts of the case are that the assessee is a Limited Company, engaged in the business of manufacturing of cloth and running spinning mills. It filed its return of income for Asst. Year 2007-08 on 30.10.2007 declaring total income of Rs. NIL after setting off brought forward loss. Assessee's case was selected for scrutiny assessment. Order under section 143(3) of the Act was passed on 29/12/2009 assessi....
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.... Bill/vouchers for transportation of machine and installation charges of the machines. 10. We find that the assessee is a Limited company and all its books of accounts are audited under the provisions of the Act as well as the Companies Act. Purchases of machineries are forming part of fixed assets schedule attached to the audited financial statement. Parties from whom machines have been purchased are registered under VAT, purchase bills have been issued, entry is available in Gate Pass Register. The reason for absence of lorry number was that the machine(s) purchased from Prakash Finstock Pvt. Ltd. was at Ex- Mill delivery and, therefore, the transportation charges were not required to be paid by the assessee and in the case of Ashutosh Fibre Pvt. Ltd., this supplier being local party, hand cart was used for bringing the separate parts of the machine to the destination which were later on assembled at the assessee's premises. Due to this reason there was no transport receipt for machine purchased from Ashutosh Fibre Pvt. Ltd. Therefore, the assessee was having sufficient reason for not having lorry receipt for the machines purchased from Prakash Finstock Pvt. Ltd. and Ashutosh ....
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.... The ld. AR submitted that during the course of assessment proceedings that were regular transactions from most of the above referred parties and the main reason for the assessee being unable to pay the liability slowly is that assessee company is sick industrial company and as applied to BIFR who vide its letter dated 22.3.2007 has sanctioned rehabilitation scheme for the company. Due to this reason and acute financial crisis faced by the company, the creditors of the company have extended their co-operation and accommodation to the company by not pressing hard for immediate payment and were agreeable for slow repayment but by no chance the claim of any of the sundry creditor has vanished. This fact was further supported by the ledger account of some of the parties wherein repayments have been made by the assessee through banking channel. The ld. AR submitted that as all the transactions entered with the sundry creditors were business transactions carried out in the normal course of business and the trading liability exhibited in the balance sheet are the liabilities to be paid by the company and has not written off the same to profit and loss account. It does not become ....
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.... assessee has treated the sundry creditors as its liability in the balance sheet as on 31.03.2007. Not a single instance is placed by the Assessing Officer in the assessment order to prove that the sundry creditors on whom he is going invoking the provisions of section 41(1) has refused its claim to receive the amount outstanding in the balance sheet under the list of sundry creditors. 17. The ld. DR has referred to the judgment of ITAT, Mumbai Bench in the case of Asht Laxmi Diamond & Jewellery vs. ITO (supra) is not applicable to the facts of the case of assessee because in the above judgment debts were outstanding for several years and creditors had no dealing with the assessee for last many years and nor there was any demand for payment by any of the said parties from assessee for last more than 10 years. But this is not the case of the assessee as the transactions between the assessee and the sundry creditors are going on and nor the Assessing Officer has been able to prove that any of the sundry creditor has relinquished the right to his claim from the assessee. 18. On the other hand in the case of Sugauli Sugar Works (P) Ltd. (supra) Hon'ble Supreme Court gave a land m....