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TMI Blog2015 (6) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the ld.CIT(A).- Decided in favour of assessee. Addition on account of cessation of liability - CIT(A) deleted the addition - Held that:- Ss relying on CIT vs. Nitin S.Garg [2012 (5) TMI 30 - Gujarat High Court] wherein held that ITAT is justified in taking the view that as assessee had continued to show the admitted amounts as liabilities in its balance sheet the same cannot be treated as assessment of liabilities - merely because the liabilities are outstanding for last many years, it cannot be inferred that the said liabilities have seized to exist – it is on part of AO to prove that the assessee has obtained the benefits in respect of such trading liabilities by way of remission or cessation which he fails to do - in the absence of the creditor, it is not possible for the authority to come to a conclusion that the debt is barred and has become unenforceable - Decided in favour of assessee. Disallowance of labour charges - Held that:- is evident from the order of ld.CIT(A) that he declined to accept the evidences on the basis that no formal request has been made. The contention of the assessee had been throughout both before the AO and the ld.CIT(A) that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16,06,500/- made on account of cessation of liability. 4. On the facts and circumstances of the case, the Ld.Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. 2.1 Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 23/11/2009, thereby the Assessing Officer (AO in short) made addition/disallowance of mobilization advance amounting to ₹ 73,61,294/-, disallowance of Directors remuneration amounting to ₹ 13,20,000/- and made addition on account of cessation of liability of ₹ 16,06,500/-. The assessee feeling aggrieved by the assessment order, preferred an appeal before the ld.CIT(A), who after considering the submissions and following the decision passed by the CIT(A) in assessee s own case for AY 1995-96, partly allowed the appeal; thereby the ld.CIT(A) deleted the addition. However, the credit for TDS was directed to be given in the year when income is offered. The ld.CIT(A) in respect of the disallowance of Director s remuneration also, partly allowed the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of payment. Therefore, it will be wrong to say that in a case of receipt of advance, if TDS has been deducted the appellant has earned income in the same year. Therefore, the addition made by the A.O. deserve to be deleted. Further, it may be pointed out here that as per the provisions of section 199 of the Act, the credit of the TDS shall be given for the amount deducted for the assessment year for which such income is assessable. The appellant company had offered the income in the subsequent assessment year and therefore, the A.O. ought to have given the credit of the TDS in the year for which such income assessable, instead of treating the income of the subsequent year for the year under consideration. The A.O. while giving effect to this order, is directed to give credit of TDS accordingly. 2.1.2. On further appeal, Tribunal held as under:- After hearing both the parties, we find no infirmity in the order of Ld.CIT(A) in holding that the advance received by the assessee against the purchase of material at site before the execution of work, the same cannot be treated as income of the assessee, especially when the assessee is following the practice of showing advance receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear after year and in all previous years, the stand of the assessee has been accepted. The Appellate Commissioner deleted the addition relying on the decision of the Tribunal. Revenue had carried the order of CIT(Appeals) before the Tribunal. The Tribunal by its judgment dated 27.6.2008 dismissed the Revenue's appeal. Such decision of the Tribunal was carried further in appeal before this Court in Tax Appeal No.163 of 2009, which was dismissed by order dated 3.5.2011. 14. In the result, it would emerge that the central issue on which the Assessing Officer seeks to reopen the assessment previously framed after scrutiny, has been held in favour of the assessee. In that view of the matter, we do not find that the notice can be sustained in law and the same is, therefore, quashed. Petition is disposed of accordingly. Rule is made absolute accordingly. 5.1. In view of the judgement of the Hon ble Gujarat High Court, we do not find any reason to interfere with the order of the ld.CIT(A), same is hereby upheld. Thus, ground No.1 of the Revenue s appeal is rejected. 6. Ground No.2 is against part deletion of addition made on account of disallowance of Directors remuneration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The appellant has been able to justify to some extent the payment of remuneration. The three directors are assessed to tax and the incomes returned by them are ₹ 7.81 lakhs; ₹ 3.27 lakhs and ₹ 2.98 lakhs respectively. Taking the facts of the case into consideration, I find it reasonable to direct the A.O. to allow the remuneration to the extent allowed in the immediately preceding A.Y. Thus disallowance of enhanced remuneration to the extent of ₹ 3.4 lakhs stands confirmed and the balance disallowance is deleted. This ground of appeal is partly allowed. 7.1. It is not controverted by the Revenue that in the immediately preceding years, i.e. AYs 2004-05 2006-07 the claim of the assessee in respect of the remuneration of Directors claim was allowed in the scrutiny assessment passed u/s.143(3) of the Act. Since the Revenue has not placed any material on record suggesting that any change into the facts and circumstances in the year under appeal, therefore we do not see no reason to interfere in the order of the ld.CIT(A). Thus, this ground of Revenue s appeal is rejected. 7.2. Ground No.3 is against deletion of addition made on account of cessation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liabilities by way of remission or cessation thereof which is not the case before us. Merely because the assessee obtained benefit of reduction in the earlier years and balance is carried forward in the subsequent year, it would not prove that the trading liabilities of the assessee have become non existent. 16. Moreover, as pointed out in the ease of Sugauli Sugar Works (P.) Ltd. (supra), vide the last five lines of the paragraph-6 of the judgement, the question whether the liability is actually barred by limitation is not a matter which can be decided by considering the assessee's case alone but has to be decided only if the creditor is before the concerned authority. In the absence of the creditor, it is not possible for the authority to come to a conclusion that the debt is barred and has become unenforceable. There may be circumstances which may enable the creditor to come with a proceeding for enforcement of the debt even after expiry of the normal period of limitation as provided in the Limitation Act. 17. We, thus, find that the views taken by the Tribunal is absolutely consistent with the ones taken by the Supreme Court in the case of Sugauli Sugar Works (P.) Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra) in paragraph Nos.6 to 7.1. of this order, wherein we have dismissed the ground raised by the Revenue by upholding the order of the ld.CIT(A) in partly allowing the assessee s claim. Therefore, this ground of assessee s cross-objection is also rejected. 12. Ground Nos.2 3 are general in nature require no independent adjudication. As a result, assessee s cross-objection is dismissed. 13. Now, we take up the assessee s appeals; i.e. ITA No.1387/Ahd/2012 for AY 2008-09 and ITA No.2126/Ahd/2012 for AY 2009-10. (a) In ITA No.1387/Ahd/2012 for AY 2008-09, the assessee has raised the following concised grounds of appeal:- 1 2. Ld.CIT(A) erred in law and on facts in confirming disallowance of labour charges made by AO of ₹ 80,59,275/- on the basis that genuineness of the labour payment remained unproved. Ld.CIT(A) ought to have deleted the disallowance. It be so held now. 3. Alternatively and without prejudice to above, both the lower authorities erred in not appreciating that app offered for tax amount of work done by labour contractors as part of total contract receipts no disallowance was called for even in absence of identity of contractors not sufficiently pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided the issues by observing as under:- 3.4. Taking into account the entirety of facts, I am inclined to agree with the contentions of the Ld.A.O. for the following reasons:- (a) In his counter comments the appellant has furnished new address in respect of these labour contractors. In addition to this the appellant has also furnished new PAN in respect of Bashirbhai Allahrakha. The bank statement reflecting payments to these concerns were also not before the A.O. during the remand report proceedings. These evidences can be accepted during the appellant proceedings only as per the provisions of Rule 46A of the I.T.Rules, 1962. For this purpose, the appellant has to make a specific request and hs to furnish documentary evidences to prove that his case is covered with from exceptions as mentioned in Rule 46A. The appellant has neither made a formal request to admit these additional evidences or filed evidences to prove that in his case the exceptions as mentioned in rule 46A are attracted, accordingly these evidences cannot be accepted. (b) During the appellate proceedings, I have received confirmations from all the labour contractors by post. In these confirmations it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to prove the factum of labour jobs done by th4ese contractors. In absence of such vital evidences, genuineness of these expenses cannot be accepted. In view of above facts, I am of the considered view that genuineness of labour charges of ₹ 80,59,275/- remains unproved. Accordingly, I am inclined to agree with the Ld.A.O. and disallowance of ₹ 89,59,275/- is confirmed. This ground of appeal is dismissed. 13.4. It is evident from the order of ld.CIT(A) that he declined to accept the evidences on the basis that no formal request has been made. The contention of the assessee had been throughout both before the AO and the ld.CIT(A) that the assessee made payment to labour contractors, such payment was made for the purpose of business. We are unable to uphold the view of ld.CIT(A) since there is no dispute with regard to the fact that the assessee has carried out certain work. In this process, he employed labour contractors. No further inquiry is made by the authorities below for finding out the genuineness of claim of the assessee. In our considered view, the assessee ought to have given chance to prove the genuineness of expenditure since it is not the case where the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed. 14.2. Ground Nos.2 3 are general in nature require no independent adjudication. 14.3. In the result, the appeal of the assessee in ITA No.2126/Ahd/2012 for AY 2009-10 is dismissed. 15. Lastly, we take up the Revenue s appeal, i.e. ITA No.2497/Ahd/2012 for AY 2009-10, wherein following grounds have been taken:- 1. The ld.CIT(A) has erred in law and on facts in deleting the addition of ₹ 85,50,913/- on account of Retention money added back to the income of the Assessee. ii) The ld.CIT(A) has further erred in law and on facts in relying on the decision of the Hon.Guj.High Court in Assessee s own case for the AY 1995-96 as the issue involved was of Advance money and not of Retention money. iii) On the facts and circumstances of the case, the Ld.Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. iv) It is, therefore, prayed that the order of the Ld.Commissioner of Income tax (A) may be set-aside and that of the Assessing Officer be restored. 15.1. First and second ground of Revenue s appeal are against deletion of addition of ₹ 85,50,913/- on account of retention money added back to the income. 15.2. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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