TaxTMI 
TaxTMI 
2017 (7) TMI 574
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....as justified in not appreciating that in the present case, the ingredients of Sec. 41 are not satisfied inasmuch as the appellant has not claimed any deduction or allowance in respect of the trading liability and the said trade liability has not ceased to exist during the A.Y. 2012-13 and therefore, the amount could not be added in the income under Section 41 of the Income Tax Act? II. Whether in the facts and circumstances of the case, the Tribunal was justified in not appreciating that in the present case, the ingredients of Sec. 41 are not satisfied inasmuch as the appellant has not obtained any benefit by way of remission or cessation of the liability and therefore, the amount could not be added in the income under Section 41 o....
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....e brought forward from the earlier years. The Assessing Officer therefore issued a show cause notice requiring the assessee to file details of such advances. In response to the queries, the assessee explained that the same were in the nature of the advances received from the retail customer under the Sales Promotion Scheme launched by the assessee in the financial year 198687. It was a scheme for sales promotion of the company's black and white TV sets. As per the scheme, the assessee had collected a sum of Rs. 500/from each customer by sale of coupons. Upon such customer enrolling four members who would purchase such coupons, he would be entitled to receive a TV set free of cost. Such newly enrolled members would also be eligible to su....
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....e said sum to the income of the assessee. 5. The assessee carried the matter in appeal. Commissioner of Income Tax (Appeals) undertook a detailed examination of materials on record and confirmed the view of the Assessing Officer. In particular, the appellate Commissioner referred to the following factors: I. The advertisement under which the scheme was launched envisaged the time limit of 12 months from the date of enrollment of a customer as a member of the scheme. It was provided that the proposal or discount offered will automatically expire after such date. II. The outstanding amounts were as old as 12 to 15 years or more when the company was manufacturing black and while TV sets. Since the year 198889, the company ....
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....9;s case cannot be compared to those which prevailed in the cases before the Hon'ble Courts and hence caselaws cannot be applied generally to every appellant. As has been discussed above, the situation in this case is peculiar since the customers have paid only Rs. 500/each to the appellant in pursuance of a scheme which has long lapsed. This amount of Rs. 500/collected from the customers all over the country has resulted in a corpus of over Rs. 7 crores with the appellant which it has been using as its own money over the years to make various investments (discussed earlier in the order). The appellant has itself admitted that these customers are from very remote areas and a perusal of the sample vouchers and invoices presented by the a....
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....e addition of Rs. 7,87,19,819/made by the Assessing Officer is confirmed and the ground of appeal is dismissed." 7. The assessee carried the issue before the Tribunal. The Tribunal confirmed the view of the Revenue authorities. Hence the present appeal. 8. Learned counsel for the appellant submitted that this was not a case of cessation of liability. The conditions laid down under section 41 of the Act were not fulfilled. The authorities therefore, committed a serious error in adding the said sum to the income of the assessee. She further submitted that the ratio laid down by the Supreme Court in case of Commissioner of Income Tax v. Sugauli Sugar Works (P) Ltd reported in 1999 (1) SCR 400 would apply. She submitted that the facts in ....
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....ined with the company over the years without any change whatsoever. The Revenue authorities have found that there was no activity at the hands of the assessee company in connection with the scheme for past several years. Not a single customer had demanded the money back nor the assessee had made any attempt to repay the same. It was only when the Assessing Officer in the present assessment proceedings raised the issue, the assessee made correspondence with the customers. This, the Commissioner (Appeals) correctly categorized as an afterthought. More importantly in all invoices, the signatures of the member customers were missing. Their addresses were not sufficient. Over the years, the company had also invested such amount earning interest ....