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TMI Blog2013 (10) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be squarely applicable for the FY 2012-13 - There cannot be cessation of liability twice - Therefore, when as per Explanation (1) there would be cessation of liability in the FY 2012-13 i.e. relevant to the assessment year 2013-14, the addition for the same cannot be made by presuming remission or cessation of liability in the year under consideration i.e. AY 2007-08 – Decided in favor of Assessee. - ITA No. 2020/Del/2013 - - - Dated:- 11-10-2013 - Shri G. D. Agrawal And Shri I. C. Sudhir,JJ. For the Appellant : Shri K. R. Manjani, Advocate For the Respondent : Ms. Y. S. Kakkar, Sr. DR ORDER Per G. D. Agrawal, VP : This appeal by the assessee is directed against the order of learned CIT(A)-IV, New Delhi dated 5th F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated that the assessee has credited the above liability to the profit loss account and will include in its income in the return which is likely to be filed shortly. 4. Learned DR, on the other hand, stated that the assessee has not furnished any evidence, correspondence or detail which may justify that the liability was existing as on 31st March, 2007 and has ceased only during the FY 2012-13. She further stated that during assessment proceedings, the Assessing Officer allowed opportunity to the assessee to furnish the confirmation from the creditor but the same was also not furnished. The purchase was made ten years back and the whereabouts of the creditor are not known, therefore, the Assessing Officer rightly treated that the liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 or deduction has been made is in existence in that year or not; or (b) the successor in business has obtained, whether in cash or in any other manner whatsoever, any amount in respect of which loss or expenditure was incurred by the first-mentioned person or some benefit in respect of the trading liability referred to in clause (a) by way of remission or cessation thereof, the amount obtained by the successor in business or the value of benefit accruing to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability. Explanation (1) to Section 41(1) is a deeming provision by which remission or cessation of liability would be presumed in the year in which the debtor has written off the liability in his books of account. In our opinion, in the case of the assessee, Explanation (1) to Section 41(1) would be squarely applicable for the FY 2012-13. Admittedly, there cannot be cessation of liability twice. Therefore, when as per Explanation (1) there would be cessation of liability in the FY 2012-13 i.e. relevant to the assessment year 2013-14, in our opinion, the addition for the same cannot be made by presuming remission or cessation of liability in the year under consideration i.e. AY 2007-08. We, therefore, delete the addition of Rs. 7,94,592/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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