9911796707
TMI Blog2010 (4) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... l/06 for the A.Y. 1999-2000 whereby it allowed the appeal filed by the assessee/respondent and set-aside the orders passed by the Assessing Officer and Commissioner of Income Tax (Appeals). 2. The facts as borne out from the order of CIT(Appeals) are that Sh. Parmanand Kashyap, father of Sh. Rajinder Kashyap, one of the Directors of assessee company, used to purchase spare parts from different parties, on credit, in his own name, since the creditors were personally known to him. A sum of Rs.11,81,045/- was payable to Sh. Parmanand for the purchase made by him for the assessee company. The aforesaid outstanding credit balance was shown in the books of account of the Assessing Company under the sub-head "other supplier", of main-head "sundry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1999-2000 as per the audited balance-sheet and the amount due to Sh. Parmanand ultimately had been paid after his death, in the form of issue of share capital in favour of his son and legal heir Shri Rajinder Kashyap in the subsequent year. Noticing that the disputed debt acknowledged was outstanding in the records, including audited accounts, perused by it, the Tribunal concluded that there was no cessation of any liability and in fact the assessee had actually discharged the liability at a future date, thereby questioning the very claim of cessation made by the department. 5. Section 41 of Income-Tax Act, to the extent it is relevant, provides that where an allowance or deduction has been made in the assessment for any year in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility becoming unenforceable in law by the creditor, provided the debtor unequivocally declares his intention not to own the liability even if demanded by the creditor. It may also accrue by way of a judicial pronouncement, absolving the assessee from the liability. It may accrue if there is a contract between the parties whereby the liability gets extinguished or it may come to an end by discharge of the debt. Some benefit however must accrue to the assessee by virtue of remission or cessation of the liability, as the case may be. 8. Mere change of nomenclature in the books of account without anything more brings no benefit to the assessee and its liability to pay to the creditor does not get extinguished, merely by change of nomenclatur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile issuing shares to Sh.Rajinder Kashyap. Since the amount due from the assessee to late Sh. Parmanand had fallen to his share in the settlement amongst the legal heirs of late Sh. Parmanand, the assessee company adjusted the aforesaid liability instead of taking money from Sh. Rajinder Kashyap for the shares issued to him. 10. Explanation I to Section 41 has no applicability to the facts of this case since there has been no writing off of liability and only the sub-head under which the liability was shown in the account books of the assessee was changed in this case. The company acknowledged its liability to make payment of this liability and actually discharged it at a later date by issuing shares to the legal heirs of late Sh. Parmana ..... X X X X Extracts X X X X X X X X Extracts X X X X
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