9911796707
TMI Blog2012 (11) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in CIT vs. Nitin Garg [2012 (5) TMI 30 - GUJARAT HIGH COURT] the assessee had continued to show the amounts as liabilities in its balance sheet the same cannot be treated as cessation of liabilities and merely because the liabilities are outstanding for last many years, it cannot be inferred that the said liabilities have ceased to exist - in the present case also the assessee has made payments in subsequent years and in cases where the amounts are still outstanding, the provisions of section 41(1) cannot be applied. The assessee acknowledges its liability to pay. The Revenue has not been in a position to controvert the findings of CIT (A). Further the Revenue has not brought anything on record to prove the creditors to be non existent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Rs.23,351/-. 5. Aggrieved with the addition the assessee carried the matter before CIT (A). Before CIT (A) it was submitted that since the electrical fittings were attached to plant and machinery they formed part of plant and machinery and was not part of building. It was further submitted that in the earlier year depreciation at 25% has been allowed on electrical installation. CIT (A) agreed with the contentions of the assessee and allowed the depreciation at 25%.Aggrieved by the order of CIT (A),the Revenue is now in appeal before us. 6. Before us, the Ld. D.R. relied on the order of A.O. On the other hand the Ld. A.R. submitted that the electrical installation were attached to plant and machinery and therefore formed part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that in the absence of failure on the part of the assessee to furnish confirmation letters and any documentary evidence, there has been cessation of liability. He accordingly added the outstanding amount of Rs.1,23,68,527/- as income u/s.41(1). Aggrieved by the action of A.O. the assessee carried the matter before CIT (A). Before CIT (A) it was submitted that the assessee continued to have transaction with the parties even in later years. In many cases the payments were fully made in subsequent years and outstanding amount was reduced to nil and in some cases the outstanding have reduced on account of payments made by assessee. None of the parties have agreed to waive the amount nor have the balances been written-back by the assessee. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cessation of liabilities and therefore taxable u/s. 41(1). CIT (A) after considering the submissions by the assessee has held that in some cases the assessee has made payments in subsequent years and in cases where the amounts are still outstanding, the provisions of section 41(1) cannot be applied. The assessee acknowledges its liability to pay. The Revenue has not been in a position to controvert the findings of CIT (A). Further the Revenue has not brought anything on record to prove the creditors to be non existent or the creditors appearing in Balance Sheet to be of bogus in nature. In the case of CIT vs. Nitin Garg (supra) the Hon ble High Court has held that when the assessee had continued to show the amounts as liabilities in its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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