9911796707
TMI Blog2006 (5) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer on account of excess liability in the books of account of the assessee. 3. The facts relevant to the impugned dispute are as follows: The assessee company is engaged in the manufacture of paper and yarn. The Assessing Officer noticed that in the account of M/s Khem Chand Bahadur Chande Ahuja, Kotkapura and Muktsar, the assessee was showing an outstanding of Rs. 1,42,29,822. The assessee was accounting for interest to the said party at the rate of 24 per cent since the earlier years. The Assessing Officer noticed that a legal dispute arose with the said party whereby a plaint was filed by the said party in the Hon ble Punjab Haryana High Court. In response to the same the assessee filed a reply to the plaint whereby the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and on the outstanding balance, interest at the rate of 24 per cent was being provided for in the books of account and tax was duly deducted at source year after year. That the dispute with the party was pending before the Hon ble High Court and unless the same was resolved, the liability booked in the books of account could not be varied. The CIT(A), after considering the submissions of the assessee deleted the addition on the ground that the matter was subjudice and the non existence of the liability could not be established. The learned CIT(A) also noted that section 41(1) of the Act dealing with the remission or cessation of liabilities could not be invoked in the instant case on the ground that the creditor had not accepted any cessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit in the nature of cessation of remission of liability can said to have taken place. Thus, on facts and in law it can neither be inferred that the liability in question has been overstated by the assessee and nor can it be said that such liability has ceased to exist. In view of the aforesaid, we are inclined to affirm the conclusion drawn by the CIT(A) in this regards and accordingly revenue fails on this ground. 6. The second ground is with regard to the action of the CIT(A) in deleting the addition of Rs. 10,06,057 made by the Assessing Officer on account of excessive rate of interest paid to the creditors. The Assessing Officer noticed that with respect of unsecured loans raised form four parties the assessee was incurring in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years 1997-98 and 1998-99 dated 30-1-2006 was placed before the Bench. We find that the Tribunal in paras 12 to 16.4 of its order has dealt with the similar issue. The dispute was with respect to the rate of interest paid on unsecured loans over and above the rate of 18 per cent paid to the financial institutions. The Tribunal found it expedient to affirm the decision of the CIT(A) in deleting the addition. The facts and the reasons prevailing with the revenue to make the addition in this year stand to similar footing to those in the assessment year 1998-99. Respectfully, concurring with the precedent, the decision of the CIT(A) is hereby affirmed. Revenue accordingly, fails on this ground. 9. In the result appeal of the revenue is dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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