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TMI Blog2013 (2) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition u/s 41(1) – cessation of liability - AO required the assessee to furnish confirmation from the creditors with their complete details – Assessee could not satisfy the AO on this issue – AO invoked Section 41(1) – Held that:- Remission has to be granted by the creditor – Unilateral act on the part of the debtor cannot bring about a cessation of his liability - cessation of the liability may occur either by reason of the operation of law, i.e. on the liability becoming unenforceable at law by the creditor and the debtor declaring unequivocally his intention not to honour his liability, or a contract between the parties, or by discharge of the debt – Assessee has shown the said amount as its outstanding liability in the balance-sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an error in reversing the order of the Commissioner of Income Tax (Appeals)-II, Surat, without assigning any cogent and relevant reasons? (IV) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in shifting onus of burden of proof from the assessee to the revenue regarding necessary proof of sundry creditors? 2. At the outset, we may record that Questions No.3 and 4 are more in the nature of contentions and are, therefore, not required to be considered separately. 3. Question No.1 pertains to amount of Rs.58.08 lacs (rounded off) disallowed by the Assessing Officer where assessee had claimed deduction of agency commission to foreign agent. In appeal, CIT(A) confirmed the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. Therefore, it is quite obvious without much discussion and deliberation that the revenue has no case to hold the assessee responsible for an additional income of Rs.58,08,755/-. The said addition is accordingly deleted. Our above view also finds support from the decision of this Tribunal in the case of Shri Sanjay Jain v. DCIT in ITA No.1533/Ahd/2008 for assessment year 2004-05 order dated 16.12.2009. 4. We are of the view that the Tribunal committed no error. The revenue has not been able to establish that the assessee received any payment in excess of the invoiced amounts which did not indicate the receipt of a gross, but the net amount after adjustment of foreign buyer commission. We are of the opinion that no question of law, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the Tribunal committed an error in not appreciating the ratio of the Apex Court in case of T.V. Sundaram Iyengar Sons Ltd. (supra). She further relied on the decision of the Bombay High Court in case of Hindustan Food Ltd. v. Dy. Commissioner of Income Tax, (2010) 328 ITR 392 (Bom.). She submitted that the period of limitation for recovering the amount had lapsed. The liability had, therefore, ceased. The Assessing Officer, therefore, correctly invoked the provision of Section 41(1) of the Act. 8. We are, however, of the opinion that the Tribunal committed no error. As already noted, CIT(A) had examined the issue at length. He was of the opinion that by virtue of limitation, the liability cannot be said to have ceased. The Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a case of remission of liability. Similarly, a unilateral act on the part of the debtor cannot bring about a cessation of his liability. The cessation of the liability may occur either by reason of the operation of law, i.e. on the liability becoming unenforceable at law by the creditor and the debtor declaring unequivocally his intention not to honour his liability when payment is demanded by the creditor, or a contract between the parties, or by discharge of the debt -the debtor making payment thereof to his creditor. Transfer of an entry is neither an agreement between the parties nor payment of the liability. 11. In the above situation, we are of the opinion that the Tribunal committed no error. The decision of the Apex Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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