TaxTMI 
TaxTMI 
TaxTMI 
2018 (1) TMI 1454
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.... erred in law as well as on fact by admitting additional evidence with regard to undisclosed interest income of Rs. 9,20,543/- and not referring the same to the AO for remand report. 4. That the Ld. CIT(A) has erred in law as well as on fact by deleting the addition of Rs. 3,66,340/- on account of undisclosed rental income. 5. That the appellant craves to add, delete or modify any of the grounds of appeal before or at the time of hearing. 2. The first issue raised by the Revenue in this appeal is that the Ld. CIT(A) erred in deleting the addition made by the AO for Rs. 59,75,631/- on account of nongenuineness of the creditors. 3. Briefly stated facts are that the assessee in the present case is a limited company and inter alia engaged in the business of renting of immovable properties which are used for the commercial purposes. The income from the rental of commercial properties was offered to tax under the head profit and gains of business or profession. The assessee in the earlier years was also engaged in the manufacturing of television business which was closed down in the year 1997. 4. The assessee in the year under consideration has shown sundry creditors of Rs. 69,....
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....t case the liability cannot be considered to be ceased. The decisions of the Hon'ble Supreme Court in the case of Commissioner of Income Tax vs. Sugauli Sugar Works (P) ltd. 236 ITR 518 as relied upon by the appellant is important as in that case the principle laid down is that the test limitation of liability cannot be decided by the assessee itself but in the presence of the creditor. In the case of the appellant the creditors have never discharged their onus or refused to pay the appellants. Further, the decision of the Gujarat High Court in the case of CIT vs. Bhogilal Ramjibhai Atara (Appeal No. 588 of 2013), as relied upon by the appellant has gone to the extent of holding that even if the creditors are not genuine then section 41(1) shall not apply. Considering the totality of the facts and circumstances of the case, the additions made by the AO u/s 41(1) for Rs. 59,75,631/- stands deleted. As a result, this ground of appeal is disposed of as allowed." Being aggrieved by the order of Ld. CIT(A) the revenue is in second appeal before us. 6. The Ld. DR before us submitted that the addresses of the sundry creditors were not furnished at the time assessment. Thus, no veri....
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....n respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, then, the amount of cash /benefit so received shall be treated as income in the year of receipt or cessation of liability. In instant case, the respondent had continued the liability in respect of balance payable to creditors in the audited accounts and had not written back the same to the Profit & Loss accounts for the relevant year. Hence, condition (b) above has not been fulfilled in this case since the respondent had not received during the relevant year any cash or any other benefit in respect of loss/expenditure and trading liability by way of remission or cessation of liability. Hence, the provision of section 41(1) of the Act is not applicable in the instant case for the relevant year. In this regard it is pertinent to note that the balance of sundry creditors as on 31-03-2011 and as on 31-03-2012 stood at Rs. 69,74,245/- as evident from the audited financial statement. Thus, the closing liabilities for creditors as on 31-03-2011 have been continued to the immediately next year as the opening liabilities for creditors on 01-04- 2011. The sai....
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....re or some benefit in respect of such trading liability by way of remission or cessation thereof, and in case such benefit is arrived, then value of benefit accrued to him is deemed to be the profits and gains of the business or profession, which is chargeable to income-tax as the income of that previous year, that is, in the year in which benefit such derived by the assessee. Explanation 1 provides that loss or expenditure or some benefit in respect of any such trading liability by way of remission or cessation shall be includible by a unilateral act by the first person who is assessee, i.e., debtor. There is no stipulation of such unilateral act by the creditor. Here in the instant case, Explanation 1 cannot be held to be attracted at all, since there was no writing-off of the liability by the assessee to pay to the creditors in the assessee's account. In the judgment of Hon'ble Gujarat High Court in the case of CIT Vs. Nitin. S. Garg reported in 208 taxman 16 (Guj), it was held that addition u/s 41(1) can be made only when it is found that there was a remission and/or cessation of the liability. The relevant extract of the order is reproduced below:- "It is not been e....
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.... Aggrieved, assessee preferred an appeal to the Ld. CIT(A). The assessee before the Ld. CIT(A) submitted that the amount of income for Rs. 9,20,543/- was shown in the subsequent assessment year 2012-13. The assessee also filed the reconciliation statement in respect of the difference of interest income as observed by the AO. The Ld. CIT(A) after considering the submission of the assessee deleted the addition made by the AO by observing as under: "7.2. I have considered the submission of the appellant's AR and perused the materials on record. The facts as narrated by the appellant have been supported by documents as filed before me. The excess of the interest of Rs. 9,20,937/- as reflected in 26AS has already been offered to tax in the subsequent assessment year 2012-13 and therefore the AO is directed to delete the addition made. As a result, this ground of appeal is allowed." Being aggrieved by the order of the Ld. CIT(A) the Revenue is in second appeal before us. 11. The Ld. DR before us submitted that the additional documents were filed before the Ld. CIT(A) in contravention to the provision of the Rule 46A of the Income Tax Rules. Thus the impugned issue needs to be restor....
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.... the basis of which the relief was given. But the same does not amount to additional evidence in view of the order of Mumbai Tribunal in the case of Swift Freight India Limited (Supra). Thus we hold that no additional document was filed before the Ld. CIT(A). The Ld. DR has not brought anything on record contrary to the finding of the Ld. CIT(A). Thus, we hold that no additional document was admitted by the Ld. CIT(A) in contravention to the provision of the Rule 46A of the Income Tax Rules. Hence, we respectfully following the consistent view of the Tribunal decline to interfere with the order passed by the Ld. CIT(A) on this account and accordingly the ground take by Revenue is regretted. 13. The third issue raised by the Revenue in this appeal is that the Ld. CIT(A) erred in deleting the addition made by the AO for Rs. 3,56,340/- on account of undisclosed rental income. 14. The AO during the assessment proceedings observed that two parties namely Nokia India Pvt. Ltd. and Nokia Siemens Network Pvt. Ltd. has deducted the tax in the name of the assessee u/s 194J of the Act for Rs. 25,000/- and Rs. 11,634/- respectively. But the corresponding income of Rs. 2,50,000/- and Rs. 1,16....
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....ffidavit. On the above facts the AO is directed to delete the addition made of Rs. 3,36,340/-. As a result, this ground of appeal is allowed." The Revenue, being aggrieved , is in appeal before us. 16. Before us the ld. DR submitted that the relief has been granted by ld. CIT(A) on the basis of affidavit furnished before him. However, the said affidavit was never referred to the AO for his comment. Therefore, the matter should be restored back to the file of AO for fresh adjudication. The ld. DR relied on the order of the AO. On the other hand the ld. AR submitted that TDS on the aforesaid amount were inadvertently deduced and deposited in the respondent's account as the same was appearing in Form No. 26AS for the relevant year. The respondent as neither actually received nor earned any such amount from the tenants as stated above during the previous year relevant to assessment year under consideration. In this regard it is humbly submitted that during the relevant year the respondent had not provided any professional services to the aforesaid tenants as such, the question of receiving any payment in lieu of professional services does not arise. The respondent had also not taken....