TaxTMI 
TaxTMI 
2026 (7) TMI 607
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....l in Form 36 are as under: "1 That the Id. CIT(A) has erred in law and on facts in confirming the order of the AO that the Trust has given undue benefits to the specified persons vide Para 5.3 Page 34 of the order of the CIT(A), ignoring the fact that the amount was advanced to the specified persons for the attainment of the objects of the Trust. 2 That the ld. CIT(A) has erred in law and on facts in confirming the addition of Rs. 56,95,846 /- being the amount of Caution Money lying with the appellant trust prior to the year 2011-12 as Income of the assessee on account of cessation of Liability u/s 41(1) vide Para 7 Page 41 of the order of the CIT(A). 3 That the Id. CIT(A) has erred in law and on facts In confirmi....
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....e to the extent of income that violates 13(1)(d), but has sustained the addition of Rs. 56.95 lakhs u/s 41(1) of the Act, by treating the unpaid portion of the caution money existing for the period prior to 2011 (more than five years back) by treating the same as a "static liability", in absence of any fixed time limit prescribed for such refund. 5. It was further observed ( in para 7.3 of the CIT(A) order), that the assessee has not treated the receipt of the caution money collected year to year as income and has reflected the same in liability to be refunded, but not eventually refunding the same in respect of collections made prior to six years back, thereby reaping the benefits of such deposits amounts to cessation u/s 41(1), but has....
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....ail given at page 36 and 37 of CIT(A) order first amount of caution money pending is for Batch of financial year 2005-06 for which the course was completed after six years l.e. In the financial year 2012-13. That means the same was pending for 4 to 5 years only since the same was payable only after the completion of course and thereafter obtaining NOC from all the Departments and not 13-14 years. The same is the position for the subsequent years which means that for financial year 2008-19 to 2010-11 the refund of Caution Money was not even due for payments as on 31.3.2017. C. Further, it was explained that unpaid caution money lying with the appellant cannot be taxed u/s 41(1). For the application of section 41(1) following two con....
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....st as payable as the same is appearing as payable in the Balance Sheet which is an acknowledgment of liability. In support the Ld AR relied on the following decisions : i) CIT V Sugauli Sugar Works (P) Ltd 102 Taxman 713 (SC) Held that mere expiry of limitation does not extinguish liability. There must be unilateral act or agreement showing cessation ii) CIT V Kesaria Tea Co Ltd (2002) 254 ITR 434 (SC) Held that liability continues unless written back. No cessation unless confirmed remission. iii) ČIT V Jain Exports Pvt Ltd (2013) 89 DTR 265 (Del) Held that unclaimed balances do not become income unless liability is written back. iv) CIT V Chipsoft Technology Pvt Ltd (20....
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.... as reasonable in the case of non-specified persons there can be no reason to not to accept the rate of interest 18% to specified persons. 10.1 In any case the addition of Rs. 1,59,744/- made on account of reduction in the interest rate the assessed income has been utilized for the purpose of the trust and in case the assessee has already utilized the excess amount the exemption u/s 11 is allowable as income of the trust under the normal income. The Ld AR rested his arguments praying for adequate relief. 11. The Ld DR relied on the order of the Ld first appellate authority and submitted that in the instant case the liability to refund has ceased to exist because of the long period of dormancy where the unpaid caution money is retai....