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2015 (9) TMI 1108 - AT - Income TaxAddition u/s. 41(1) as cessation of liability - CIT(A) deleted the addition - Held that - CIT (A) while deleting the addition has noted that the issue in the present case was covered by the decision of Shri Govindbhai C. Patel vs. DCIT 2009 (10) TMI 637 - ITAT AHMEDABAD . Before us the Revenue has not brought any contrary binding decision in its support nor could point out any fallacy in the order of CIT (A). We therefore find no reason to interfere with the order of CIT (A). - Decided against revenue. Addition as estimated interest on diversion of funds - CIT(A) deleted the addition - Held that - CIT (A) while deleting the addition has noted that the conclusion of the A.O. of diversion of funds by the assessee is not supported by facts and has further given a finding that during the year no withdrawals have been made by the partners and neither any loans were taken by the assessee and no effective interest deduction has been claimed by the assessee. Before us, Revenue has not brought any material on record to controvert the findings of the CIT (A). In view of the aforesaid, we find no reason to interfere with the order of the CIT (A) - Decided against revenue.
Issues:
1. Deletion of addition made u/s. 41(1) as cessation of liability. 2. Deletion of addition made as estimated interest on diversion of funds. Deletion of addition u/s. 41(1) as cessation of liability: The appeal was filed by the Revenue against the order of CIT (A)- XV, Ahmedabad for Assessment Year 2007-08. The case involved the deletion of addition made u/s. 41(1) by the Assessing Officer. The assessee, a partnership firm engaged in real estate projects, had shown an amount against a canceled scheme under "loans and advances." The Assessing Officer considered the liability ceased as no payment was made for 15 years. However, the CIT (A) deleted the addition citing a decision by the ITAT Bench B Ahmedabad, which stated that only liabilities that have ceased but were allowed as deductions in earlier years can be added under section 41(1). The ITAT upheld the CIT (A) decision, dismissing the Revenue's appeal as no contrary binding decision was presented. Deletion of addition on account of estimated interest on diversion of funds: The second issue involved the addition made by the Assessing Officer for diverting unsecured loans received by the assessee for personal use of partners. The AO calculated interest charges and added a substantial amount to the income of the assessee. The CIT (A) deleted this addition, stating that the AO's conclusion was not supported by facts. The CIT (A) highlighted that no withdrawals were made by partners during the year, and no loans were taken by the firm. The Revenue appealed this decision, but the ITAT upheld the CIT (A) decision, noting that no material was presented to challenge the findings. The ITAT dismissed the Revenue's appeal, affirming the deletion of the addition. In conclusion, the ITAT Ahmedabad upheld the decisions of the CIT (A) in both issues, dismissing the Revenue's appeal in its entirety.
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