TaxTMI 
TaxTMI 
2018 (6) TMI 1506
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....ed in the assessment order which had been brought forward from earlier years, ,in respect of whom no payments were made during the previous year from whom no purchases also were made during the previous year leading the AO to conclude that the liabilities had ceased. In the written submission, the appellant furnished details of purchases and payments made during the previous year from and to various parties and it is found' from the same that the AO's finding that no purchases from and no payments to the concerned parties were made during the previous year is correct. The appellant also furnished details of payments made to the said parties during the subsequent years. The AO has not commented on the details furnished in the remand report and the appellant has contended in its rejoinder that the AO has accepted the details furnished by not commenting on the same. On careful scrutiny of the details furnished, it is seen that the appellant has simply furnished a list of payments made to the said parties, mainly in F.Y. 2010-11 without specifying the mode of payment and furnishing any confirmations from the various parties regarding the said payments. A mere list of payments c....
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.... respect of such trading liability by -way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not; or xxxx xx xx xxxxxx xx xxxxxx xx [Explanation 1 - For the purposes of this sub-section, the expression -loss or expenditure or some benefit in respect of any such trading liability by way of remission or cessation thereof-shall include the remission or cessation of any liability by a unilateral act by the first mentioned person under clause (a) or the successor in business under clause (b) of that sub-section by way of writing off such liability in his accounts.] 15. Explanation 1 which was inserted w.e.f. 1.4.1997 is not attracted to the present case since there was no writing off of the liability to pay the sundry creditors in the assessee's accounts. The question has to be considered de hors Explanation 1 to Section 41 (1). In order to invoke ....
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.... & Mfg. Co. Ltd. vs. State of Bombay AIR 1958 SC 328 the legal position was summarized by T.L. Venkatarama Aiyar, J., in the following manner: "It has been already mentioned that when a debt becomes time-barred, it does not become extinguished but only unenforceable in a Court of law. Indeed, it is on that footing that there can be statutory transfer of the debts due to the employees, and that is how the board gets title to them. If then a debt subsists even after it is barred by limitation, the employer does not get, in law, a discharge therefrom. The modes in which an obligation under a contract becomes discharged are well-defined, and the bar of limitation is not one of them. The following passages in Anson's Law of Contract, 19th Edition, p. 383, are directly in point,' "At Common Law lapse of time does not affect contractual rights. Such a right is of a permanent and indestructible character, unless either from the nature of the contract, or from its terms, it be limited in point of duration. But though the right possesses this permanent character, the remedies arising from its violation are withdrawn after a certain lapse of time; interest reipublicaeut si fi....
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....ince the creditors had not taken any steps to recover the amount, there was a cessation of the debts which brought the matter under s. 41 (1). Turning back to the judgment of the Supreme Court, we find that the judgment of the Calcutta High Court under appeal was affirmed for two reasons. The first reason was based on a judgment of the Full Bench of the Gujarat High Court in CIT vs. Bharat Iron & Steel Industries (1992) 105 CTR (Guj)(FB) 331 : (1993) 199 ITR 67 (Guj)(FB). It was held by the Supreme Court that the Gujarat High Court was right in saying that in order to attract taxability under s. 41(1) the assessee should have obtained, whether in cash or in any other manner whatsoever, any amount in respect of the loss or expenditure earlier allowed as a deduction. This part of the reasoning, in the light of the amended cl. (a) of sub-so (1) of S. 41 may not be relevant after substitution of the said clause by the Finance Act, 1992 w.e.f, 1st April, 1993, by which the words "some benefit in respect of such trading liability by way of remission or cessation thereof' were inserted. After the amendment, therefore, it is not necessary that in respect of a trading liability earlier ....
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....o are attracted and for the recovery of the dues from the employer, under s. 33C(2) of the Industrial Disputes Act, no bar of limitation comes in the way of the employees. " 15. The Supreme Court noticed that the above observations of the Bombay High Court were quoted by the Calcutta High Court in the judgment under appeal before them, and observed as under while upholding the judgment of the Calcutta High Court : "This judgment has been quoted by the High Court in the present case and followed. We have no hesitation to say that the reasoning is correct and we agree with the same. To reinforce the conclusion, the Supreme Court also noticed its earlier judgment in Bombay Dyeing & Mfg. Co. Ltd. vs. State of Bombay AIR 1958 SC 328 wherein it was held that the expiry of the period of limitation prescribed under the Limitation Act could not extinguish the debt but it would only prevent the creditor from enforcing the debt. 16. In our opinion, the judgment of the Supreme Court in CIT vs. Sugauli Sugar Works (P) Ltd. (supra) is a complete answer to the contention of the learned standing counsel. In the case before the Supreme Court for a period of almost 20 years the liability....