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TMI Blog2012 (8) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... -2012 - MR. JUSTICE S. RAVINDRA BHAT, MR. JUSTICE R.V. EASWAR, JJ. For Appellant: Mr. Sanjeev Rajpal, Advocate. For Respondent: Mr. Parag Chawla, Advocate. MR. JUSTICE S.RAVINDRA BHAT 1. The present appeal by the revenue is directed against a judgment of the Income Tax Appellate Tribunal (ITAT) dated 17-10- 2101, in ITA 2108/Del/2010. 2. Admit. The following question of law arises for consideration: Did the Tribunal fall into error of law, in its impugned judgment in setting aside the disallowance of Rs. 32,28,724/- towards unpaid liability claimed in respect of salaries of the assesse for the assessment year 2006-07? With consent of counsel for parties the appeal was heard finally. 3. The brief facts of the case are that the assesse filed its return declaring nil income, on 31-11-2006. The Assessing Officer (AO) noticed that the assesse had shown unpaid liability to an extent of Rs. 38,51,893/- on account of its employees dues. Of this, an amount of Rs. 6,23,000/- pertained to salary for the year 2005-06 and the balance pertained to the previous years; some extending to as far back in period as 2000-01. The AO called upon the assesse to furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overt objective act, or act of the creditor leading to the inference that the liability ceases in law. It was submitted that the employees or workmen can always approach the court, or authorities under the Industrial Dispute Act, and claim the unpaid wages. In such event, the assesse would be remediless. 6. Section 41 (1) of the Income Tax Act reads as follows: Profits chargeable to tax. 41. (1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the first-mentioned person) and subsequently during any previous year, (a) the first-mentioned person has obtained38, whether in cash or in any other manner whatsoever, any amount in respect of such38 loss or expenditure38 or some benefit in respect of such trading liability by way of remission or cessation thereof38, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is for the assessee to establish whether such trading liability has been fully discharged or not. This court has laid down in CIT v. Agarpara Co. Ltd. [1986] 158 ITR 78, that if there be any excess over the requirement of the assessee in respect of liability claimed and allowed, such liability must be deemed to have ceased. It has also been laid down that it may be inferred from the surrounding circumstances that there has been a cessation or remission of the liability of the assessee. It has also been laid down that if unclaimed bonus being a portion of the bonus allowed as deduction in computing the income of the assessee is carried forward from year to year and thereafter written back in the account and no tax is levied thereon, the assessee would be getting a benefit to which it was not entitled. The court in the above decision was concerned with a fact situation where the assesse had unilaterally altered the liability in its books. This aspect was sought to be highlighted as a point of distinction, by the assesse in this case, to say that here, no such change in situation had occurred and that the liability continued to be reflected in the books. 7. There is some author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h may extend to Rs. 1,000 or with both. As the liability for bonus became a statutory one, a provision made therefor or even where no provision is made, in the mercantile accounting, the amount payable is allowable if the same is in accordance with the law about the payment of bonus. Any provision over and above that payable under the Bonus Act shall not be allowable to the extent of such excess. It is not the case of the assessee before us that time to pay bonus was extended or any dispute as regards payment of bonus has been raised. The assessee has provided for bonus for its employees but a part of the bonus so provided for three several years remained unclaimed. Once bonus has been offered by the employer, but remains undrawn, it cannot be said that the liability subsists even after the expiry of the time prescribed by the statute, particularly when there is no dispute pending regarding the payment of bonus. In the context of such facts and circumstances, it may be inferred that unclaimed or unpaid bonus is an excess of the requirement of the assessee and, therefore, to that extent, in any event, the liability has ceased. 9. Two aspects are to be noticed in this context. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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