TaxTMI 
TaxTMI 
2021 (9) TMI 287
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.... by the Revenue was allowed by ITAT vide its order dated 28.09.2018. The relevant finding of the ITAT reads as follow:- "3. From the discussion in para 3 of the order (supra), it is clear that the mistake that crept into the Tribunal order for Assessment Year 2012-13, in the case on hand, was that grounds 4 and 5 have not been adjudicated by the tribunal. These grounds are extracted hereunder:- "4. On facts of the case, whether the learned CIT (Appeals) is right in allowing the appeal of the assessee on the issue of advances received against sales/services as disallowed under Section 41(1) without any valid reasoning. The learned CIT (Appeals) has held that these payments are live credits, whereas the business operations o....
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....urnish the details of trade payables along with the movement there in. Vide letter dated 27.10.2014, the assessee company submitted : "These amount have been received prior to 2003 against services/sales rendered by the company. Major portion have been received from Govt. departments to be adjusted to receivables after reconciliation." 4.1 Assessee has not furnished any other details. The contention of the assessee company is not acceptable. These amounts were received prior to 2003. It is seen that even after the Government of Karnataka, vide order dated 03.09.2003 directed to stop all business activities of the assessee company, the company is yet to reconcile the advances which the company itself claims to have received....
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....g in the accounts is extinguished/remitted in the hands of the creditor as well as the debtors respectively. It is only in such a situation of this finality that, an impugned amount can be said to have assumed the character of income in the Assessee's hands. The issue therefore, in the present case is primarily a question of fact; as to whether the liability ceased to exist in the current year under assessment. The various judicial pronouncements on the subject also lead to the same understanding. The AO in the present case, apart from stating that, these were still-liabilities for several years has not delved any further into the facts. Therefore the conclusion drawn appears to be rather premature, in light of the submissions ....
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....s. 6,03,90,079/- is directed to be deleted." 4. Aggrieved, the Revenue has raised this issue before the ITAT. The learned Departmental Representative relied on the assessment order. The learned AR relied on the findings of the CIT(A). 5. We have heard rival submissions and perused the material on record. Admittedly, these amounts were received prior to 2003 and was outstanding due to closure of assessee-company. The advances so received were adjusted to the receivables and reconciliation was filed. As on 31.03.2016, the advances received against sales amount is `Nil' as per the Balance Sheet. Therefore, the liability cannot be construed to have been extinguished and assumed the character of income as envisaged in section 41(1) of ....