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TMI Blog2016 (3) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... med credit balances by the assessee. In view of the above, we hold that the addition made by the AO u/s. 41(1) of the Act is to be deleted. - Decided in favour of assessee Addition towards decrease in stock - Held that:- The appellant has claimed reduction in stock on account of damage of stock in the heavy rains and selling of' goods on minimal prices. The fact of loss to appellant on account of heavy rains occurred in Mumbai, in July 2005, and consequently damage of appellant's stock was also subject matter of appeals of earlier years. In A.Y. 2006-07, the appellant's claim of gross loss of ₹ 8.25 crore was disallowed by the AO. In appeal order, the disallowance made by AO was deleted. The Sales Tax Authorities have also consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32,68,454/- for the assessment years 2006-07 and 2008-09 respectively u/s. 41(1) of the Act treating the same as cessation of liability. The AO stated that sundry creditors as on 31.3.2005 which stood at ₹ 2,92,71,073 as against ₹ 2,65,48,762/- as on 31.3.2004 and no details of the sundry creditors were available on record. He was also of the view that debtors as on 1.4.2005 amounted to ₹ 2,12,36,856/- got reduced to ₹ 80,05,080/- as on 31.3.2006 and this shows that the assessee collected its dues from the debtors and at the same time not made any payments to the creditors. Therefore, he inferred that either the creditors have ceased to exist or the corresponding payments are no more payable, therefore, he brought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee that complete details were furnished in respect of the creditors by letter dated 5.11.2008 and therefore there is no justification in stating that no details were furnished. The Ld. CIT(A) deleted the addition observing that the assessee has furnished all the details and the AO failed to prove that the liability in respect of the trade creditors ceased to exist. He further held that simply because the assessee has realized amount from debtors and no payment was made to the creditors, it cannot be inferred that creditors are ceased to exist. 7.1. We agree with the findings of the Ld. CIT(A). The Hon ble Supreme Court in the case of CIT Vs Sugauli Sugar Works (P) Ltd. (supra) held that mere unilateral entry made by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al year and also the Delhi office which the prime place for this market and there was no option left but to dispose of entire stock in one lot. Therefore in this financial year in the month of May, 2007, entire stock was sold at a lumpsum price of ₹ 7.78 lacs only to M/s. Susen, M.G. Road, Bhavnagar. However, the AO rejecting the submissions of the assessee brought to tax at ₹ 1 crore towards decrease on stock. 9. On appeal, the Ld. CIT(A) deleted the disallowance against which the Revenue is in appeal. 10. The Ld. DR vehemently supports the orders of the AO in making disallowance towards decrease in stock. 11. The Ld. Counsel for the assessee while supporting the orders of the Ld. CIT(A) reiterating the submissions mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts of the case. The appellant has claimed reduction in stock on account of damage of stock in the heavy rains and selling of' goods on minimal prices. The fact of loss to appellant on account of heavy rains occurred in Mumbai, in July 2005, and consequently damage of appellant's stock was also subject matter of appeals of earlier years. In A.Y. 2006-07, the appellant's claim of gross loss of ₹ 8.25 crore was disallowed by the AO. In appeal order, the disallowance made by AO was deleted. The Sales Tax Authorities have also considered the effect of heavy rains of 2005, on appellant's business and loss to the appellant in their sales tax assessment order. It has been mentioned in such sales tax assessment order that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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