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TMI Blog2010 (6) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... .G. BANSAL, JJ. Gautham Jain for the Appellant. B.K. Gupta for the Respondent. ORDER K.G. Bansal, Accountant Member. This appeal of the assessee emanates from the order of the Commissioner of Income-tax (Appeals)-XXVI, New Delhi, passed on June 7, 2008 in Appeal No. 359/06-07, and it pertains to the assessment year 2004-05. The assessee had taken up seven grounds in the appeal. Grounds Nos. 3 to 7 were not pressed before us by learned counsel for the assessee. Therefore, these grounds are dismissed as not pressed. Learned counsel also explained the import of grounds Nos. 1 and 2 that the authorities below had brought to tax an amount of Rs. 33,89,860, in respect of two creditors, which remained outstanding at the end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common sense view, it becomes the income of the assessee. Therefore, these amounts were taken as the income under section 41(1). However, from the computation of income, it is seen that only a sum of Rs. 33,89,860 was added to the total income of the assessee. 3. Aggrieved by this order, the assessee filed appeal before the Commissioner of Income-tax (Appeals). He concurred with the view of the Assessing Officer that since more than three years have elapsed and the present whereabouts of the creditors are not known, the amount was includible in the total income of the assessee. He also rectified the error committed by the Assessing Officer in not adding the sum of Rs. 1,16,378, in respect of Laser Graphics, to the total income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntainers Ltd. v. Dy. CIT [2009] 308 ITR 417/178 Taxman 192 (Bom.). 7. Briefly speaking the facts are that liabilities arose in the assessment year 2000-01 in respect of printing job works. These liabilities have been carried forward from year to year and find place in the balance-sheet of this year also. Local enquiries made by the Assessing Officer revealed that these persons shifted from their known addresses in the year 2001 and the present whereabouts are not known even to the assessee. There is no correspondence between the assessee, and them since the year 2001. 8. Coming to the case of T.V. Sundaram Iyengar Sons Ltd. (supra) (SC), the facts are that the assessee had received certain advances in the course of business, which wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount to be his own money as the liabilities have been shown in the balance-sheet. No doubt, the amounts have become barred by limitation and the creditors have no legal remedy to recover these amounts, but the fact is that the assessee continues to show these amounts as liability in his books of account. 10. In the case of Solid Containers Ltd. (supra) the facts were similar to the facts in the case of T.V. Sundaram Iyengar Sons Ltd. (supra). The hon'ble court brought the amounts to tax by following the aforesaid decision of the hon'ble Supreme Court. The facts of that case are also distinguishable. That the assessee had taken a loan of Rs. 6,86,071 for the business purpose. As per consent terms, arrived at in a suit, the assessee cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itially did not fall within the scope of the provisions rendering it liable to tax subsequently had become the assessee's income being part of the trading of the assessee. Similar view was also taken by a Bench of the Madras High Court in the case of CIT v. Aries Advertising P. Ltd. [2002] 255 ITR 510 (Mad). The court took the view that the assessee because of trading operation became richer by the amount which had been transferred and/or retained in the profit and loss account of the assessee." 11. In the case of Jay Engineering Works Ltd. (supra) the facts are that the assessee wrote off a sum of Rs. 1,16,240 in respect of unclaimed wages and sundry credit balance. By relying on the decision in the case of Sugauli Sugar Works P. Ltd. (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the debtor unilaterally without any act on the part of the creditor, it will not lead to a conclusion that the liability has ceased to exist. Such an act will also not confer any benefits on the debtor as contemplated in section 41(1). For the sake of ready reference, the relevant portion of the judgment is reproduced below (page 523) : "The principle that expiry of the period of limitation prescribed under the Limitation Act could not extinguish the debt but it would only prevent the creditor from enforcing the debt, has been well settled. It is enough to refer to the decision of this court in Bombay Dyeing and Manufacturing Co. Ltd. v. State of Bombay, AIR 1958 SC 328; [1958] SCR 1122. If that principle is applied, it is clear that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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