TaxTMI 
TaxTMI 
2026 (7) TMI 1068
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....ssessment year 2014-15. 2. The appellant is a resident individual. The appellant, inter alia, engages in the business of energy and fuel management, mining and acquisition. The assessee's business includes evaluation of market, target potential clients, assisting the client to avail credit facility, planning of shipment of coal etc. During the relevant year, the appellant filed his Return of Income (RoI) for the assessment year in question on 30.11.2014 declaring a total income of Rs. 93,82,420/-. The case was selected for scrutiny by issuing notice under Section 143(2) of the Income Tax Act, 1961 ('Act' for short) on 10.09.2015. Subsequently, a notice under Section 142(1) of the Act came to be issued alongwith questionnaire on 01.06.201....
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....ng the financial year 2011-12, it became essential for the Assessee enable professional assistance on letters of credit from Rockfort Gulf FZE ('a company'). Rockfort is into various businesses like trading of cement and cement raw materials to Shri. Girish Raghavan-AY 2014-15 UAE, Qatar etc, providing assistance for arrangement of funds, providing consultation on supply coal etc. Assessee took professional assistance of Rockfort for his business as well. Thus, Rockfort Gulf FZE raised an invoice for INR 20,471,565 as payable by the assessee." Particulars Amount Business Expenses 18,090,073.00 Office Expenses 2,381,492.00 Total 20,471,565.00 The overall market conditions for energy and fuel industry ....
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....hat the liability ceased to exist that too merely on the basis of their age. iv) That there is nothing to show that the creditors had discharged the assessee from payments of these liabilities. v) that for the application of provisions of section 41(1), an assessee must get some benefit in real terms by way of remission or cessation of the liabilities." 6. The AO found that in assessment year 2012-13 the deduction was allowed towards the amount payable to Rockfort Gulf FZE, which is in respect of a trading liability. The AO has found that the said liability has ceased to exist, which should be treated as deemed profit and gains of business for the assessment year in question in this appeal. It is in these circumstances ....
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.... It is submitted that even assuming that as on the date of assessment order four years had elapsed, still then merely on account of the fact that the remedy to recover the amount was barred, the right itself was not lost. Reliance is placed on the decision of Supreme Court in Bombay Dyeing & Manufacturing Co. Ltd. vs. State of Bombay [1958] SCR 1122 in order to submit that the limitation only bars the remedy and not the right. The learned AR has placed reliance on the decision of Bombay High Court in Kohinoor Mills Co. Ltd. (49 ITR 578) in which the High Court placing reliance on the decision of Supreme Court in Bombay Dyeing & Manufacturing Co. Ltd (supra) has refused to permit the disallowance under Section 10(2A) of the Act towards uncla....
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....tted that the CIT(A), in the circumstances of the case, had reduced the disallowance made by the Assessing Officer and restricted it to Rs. 3,02,022/- 16. We have considered the submissions made. The disallowance u/s. 41(1) of the Act on account of alleged cessation of liability, in our opinion, cannot be sustained. It is necessary to note that the liability was incurred by the appellant towards Rockfort Gulf FZE in F.Y. 2011-12 relevant to A.Y. 2012-13. The impugned disallowance has been made for A.Y. 2014-15. Although on the date of the passing of the assessment order i.e. on 26.12.2016 more than three years had elapsed, the fact remains that the disallowance pertains to A.Y. 2014-15 which cannot be said to be beyond three years from A....