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TMI Blog2013 (12) TMI 654X X X X Extracts X X X X X X X X Extracts X X X X ..... : Shri N.M.Bhansali, Advocate ORDER Per Bench : This is an appeal filed by the Revenue against the order of the Ld. CIT(A)- XX, Kolkata dated 11th May, 2010 for the assessment year 2007-2008. 2. The only ground involved in this appeal relates to the deletion of addition of Rs.1,04,06,599/- added by the AO as the cessation of the liability under section 41(1) of the Income Tax Act. 3. Brief facts of the case are that while making the assessment, the AO noticed from the balance-sheet of the assessee that the balance-sheet shows outstanding liability towards the creditors amounting to Rs.1,66,53,143/- in respect of 28 creditors. The AO further noticed that these liabilities were outstanding from the assessment year 2001-02. Notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt has held that once the assessee has continued to show the admitted amount as liability in the balance sheet, it is not assessable u/s 41(1). Unless and until there is a cessation of liability, section 41 will not be pressed into service. In. the case of Visnagar Taluka Audyogik Sahakari Mandli Ltd vs CIT 242 ITR 627 (Gujrat), the Hon'ble Gujrat High Court has held that one has to go by the language used in section 41(1) to find out whether or not the amount was obtained by the assessee or whether or not some benefit in respect of trading liability by way of remission or cessation thereof was obtained by the assessee and it is in the previous year in which the amount or benefit, as the case may be, has been obtained that the amount or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO to presume that the liability has ceased to exist. Even if the notice u/s 133(6) could not be served on the creditors, the AO cannot simply presume that the liability appearing in the balance sheet has ceased to exist. I find substance in the argument that that the provisions of section 41(1) have no application in the case of the appellant. The legal pronouncements in this regard also support the case of the appellant. I also find force in the argument that the appellant has simply added as a broker between the fariyas and the Jute Mills; and, that no expenditure had been claimed by the appellant in respect of the said liability; and therefore, the provisions of section 41(1) are not attracted. In view of the above, I am of the opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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