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TMI Blog2016 (7) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... following grounds of appeal :- 1) On the facts and in the circumstances of the case Ld. CIT(A) has erred in holding that the liability of the assessee in respect of wages has not ceased to exist. 2) On the facts and circumstances of the case Ld. CIT(A) has erred in holding that liability in respect of Investment Allowance Reserve was not claimed in the P&L Account, and hence could not be added u/s. 41(1) of I.T. Act 1961. 3) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in appreciating the merits of the case. 3. Brief history is that the assessee did not carry out any business activity during the year under consideration and declared at NIL income through its return of income filed on 08-01-2008. 4. Du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is further seen that there was no complete cessation, as the amounts are still payable to the workers by the Appellant company and the claims for which has not been forgone by the claimant i.e. the workers. Therefore the same cannot be considered as cessation of liability even if recovery is barred by limitation. It is further seen that the decision Kohinoor Mills Co. Ltd. Vs. C.I.T is directly applicable in the case of the Appellant wherein it was held that even though recovery of any claim wages was barred by limitation, legally debt subsisted and hence there was no cessation of liability. The amount therefore, could not be added to the income. Further the facts in the case of the Appellant wherein it is seen that the liability is towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rule 46A and this position is not disputed even by Ld. A/R. We, therefore, set aside the matter to AO. Accordingly, ground no.1 is allowed for statistical purposes. 8. Regarding ground no-2, the AO found that an amount of Rs. 10,50,000/- under the head investment allowance reserve and. The AO added the same by treating it ceased liability on the ground that the amount of Reserve has not been utilized for acquiring 'plant & machinery' within the period of 8 years from the date of creation and for not filing any evidence by the assessee. 9. On appeal, the CIT(A) after considering the submissions of the assessee held as under:- "3.1 In Appeal it has been submitted that the reserve was created in A.Yr. 1977-78 and if the provision of law i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance or deduction in any year in respect of any Loss, Expenditure or Trading Liability incurred by the Appellant. Therefore the addition made by the AO is not justified and the same is deleted (Relief Rs. 10,50,000/-). 10. Before us, the Ld. DR submits that as per section 32A which under dispute is discontinued. It ceased to exist. However, he relied on the order of the AO. The Ld.AR submits that the assessee created a provision for investment allowance reserve. The assessee did not avail any deduction on such reserve. 11. Heard rival submissions and perused the relevant material on record. We find Sub-Section (1) of Section 32A is clear that there shall be a deduction equal to the 25% of actual cost of machinery or plant installed in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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