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TMI Blog2015 (7) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... LLAHABAD HIGH COURT] against which SLP filed by the department has also been dismissed. Though in the case of CIT Vs Cresent Export Syndicate [2013 (5) TMI 510 - CALCUTTA HIGH COURT] and CIT vs Sikander Khan [2013 (5) TMI 457 - GUJARAT HIGH COURT] are not in favour of assessee but keeping in view of case of CIT VS Vegetable products [1973 (1) TMI 1 - SUPREME Court ], the assessee is entitled to application of judgement benefiting to it - Decided in favour of assessee. Addition u/s 41(1) being salary payable - Held that:- Various courts have decided that addition u/s 41(1) can only be made if the provisions of liability are written back in the P & L account and in the absence of such write back, addition u/s 41(1) cannot be made. It is u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a violation of Section 269SS of the Act. 2. The Brief facts of the case are that the case of the assessee was selected for scrutiny and during assessment proceedings, the A.O. observed that he assessee had made certain payments to professionals without deduction of TDS in accordance with the provisions of Section 194J and, therefore, he disallowed the payment u/s 40(a)(ia) of the Act and he disallowed an amount of ₹ 4,28,675/-. The A.O. further observed that the assessee in its balance sheet had reflected a provision of ₹ 1.80 lacs on account of salary payable. He further observed that the assessee had paid only ₹ 20,000/- out of the provisions made for ₹ 1.80 lacs. The A.O. observed that it is unusual that an em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the books of account and it was not written back by the assessee and, therefore, the provision of Section 41(1) were not applicable. As regards the 3rd addition for violation of the provision of Section 269SS, Ld. A.R. submitted that the assessee had not accepted the loan in cash and rather the director had directly paid to Hundai Motors and assessee had just passed a journal entry by crediting the amount to the account of Directors and therefore there was no violation of the provisions of Section 269SS. Reliance in this respect was placed on the case law of CIT Vs Worldwide Townships Projects Ltd. decided by Hon'ble Delhi High Court in I.T.A.No. 232/2014 for the proposition that provisions of section 269SS are not applicable in a cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that various courts have decided that addition u/s 41(1) can only be made if the provisions of liability are written back in the P L account and in the absence of such write back, addition u/s 41(1) cannot be made. It is undisputed fact that provisions were not written back and were outstanding in the balance sheet and reflection of such liabilities in the balance sheet itself proves that liabilities had not ceased and therefore, provisions of Section 41(1) were not applicable. In view of above, ground No.2 of the appeal is also allowed. 7. As regards 3rd grievance for violation of the provisions of Section 269SS, we find that the provisions of section 269SS are applicable in the case of acceptance of loan or deposit in cash. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded in the books of accounts by way of journal entries, i.e. crediting the account of a party to whom monies are payable or debiting the account of a party from whom monies are receivable in the books of accounts, is clearly outside the ambit of the provision of Section 269SS of the Act, because passing such entries does not involve acceptance of any loan or deposit of money. ' In the present case, admittedly no money was transacted other than' through 'banking channels. M/s P ACL India Ltd. made certain payments through banking channels to land owners. This payment made on behalf of the assessee was recorded by the assessee in its books by crediting the account of M/s PACL India Ltd. In view of this admitted position, no inf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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