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TMI Blog2014 (1) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... nder consideration wherein the suspense account balance carried forward for 20 years was simply reflected in the balance sheet – There appears to be the reason why no addition on account of suspense balance was made by the A.O. in the assessment completed in the case of the assessee - the assessee is following cash system of accounting and as held in CIT vs. American Consulting Corporation [1979 (8) TMI 40 - ORISSA High Court] - Income u/s 28(iv) on account of benefit can be assessed to tax only on receipt basis - there is nothing brought on record by the Revenue to show that any such benefit was actually received by the assessee in cash on account of suspense account balance - thus, the addition made by the A.O. u/s 28(iv) of the Act on account of suspense account balance pertaining to the earlier year is not sustainable – Decided in favour of Assessee. - ITA No.3306/Mum/2010 - - - Dated:- 10-5-2013 - P M Jagtap and S T M Pavalan, JJ. For the Appellants : Shri Vipul Joshi Shri Shrey Joshi For the Respondent : Dr Rajendra Kumar ORDER:- Per: P M Jagtap: This appeal filed by the assessee is directed against the order of the ld. CIT(A) - 23, Mumbai dtd. 10-03- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee preferred an appeal before the ld. CIT(A) disputing the addition of Rs.1,05,56,849/- made on account of suspense account balance by invoking the provisions of section 28(iv) of the Act. Before the ld. CIT(A), it was submitted on behalf of the assessee that the amount in question in suspense account was carried forward in the balance sheet right from 1-4-1985 and the same having no bearing or impact on the income of the assessee for the year under consideration, it could not be treated as its income for that year by invoking the provisions of section 28(iv) of the Act. It was contended that the issue of suspense account related to the period which was covered by order of Settlement Commission and the assessee having already paid the tax pursuant to the order of the Settlement Commission for the said period, there was no justification to add the suspense account balance relating to A.Y. 1985-86 in the year under consideration. 4. The ld. CIT(A) did not find merit in the contentions raised on behalf of the assessee and confirmed the addition made by the A.O. on account of suspense account balance for the following reasons given in para No. 2.3 of his impugned order:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce sheet showed bidi workers outstanding liabilities (old). On similar facts and circumstances in the present appellant s case the amount is justifiably a cessation of liability. The Bombay High Court in CIT V/s General Electrodes Equipments Ltd. (1985) 155 ITR 78 (Bom) has recognized that the benefit of extinction of liability which had continued undischarged is covered u/s 28(iv) of the I T Act. In Protos Engineers Co. Pvt. Ltd. V/s CIT (1995) 211 ITR 919 (Bom), it was held that advances against public supplies (unclaimed balances) received in earlier years had a close and direct nexus with the business and definitely amounted to a benefit u/s 28(iv) . Aggrieved by the order of the ld. CIT(A), the assessee has preferred this appeal before the Tribunal. 5. The ld. counsel for the assessee submitted that the suspense account credit balance for the first time reflected in the balance sheet of the assessee as on 30-6-1986 and the same was explained in the audit report for the said year being the difference which had remained un-reconciled due to seizure of the books of account by the Income Tax authorities during search which were not released. He invited our attention to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perquisite, whether convertible into money or not, arising from business or the exercise of a profession is chargeable to Income Tax under the head profits and gains of business or profession and as held by the Hon ble Gujarat High Court in the case of CIT vs. Bhavnagar Bone and Fertiliser C. Ltd. reported in (1987) 166 ITR 316, there must be a nexus between the business of the assessee and the benefit which the assessee has derived in order to attract the provisions of section 28(iv) of the Act. There is no nexus established in the present case between the business of the assessee and the benefit which the assessee has alleged to have derived from the credit balance in the suspense account. As a matter of fact, the said suspense account pertained to A.Y. 1985-86 and it represented difference in the balance sheet which could not be reconciled due to seizure of the books of account by the Income Tax authorities which were not returned to the assessee. In the absence of such books, the assessee declared its income for A.Y. 1985-86 on estimated basis that was a subject matter of the order of the Settlement Commission which determined the income of the assessee for that year on whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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