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TMI Blog2017 (7) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... unt remained with the company over the years without any change whatsoever. The Revenue authorities have found that there was no activity at the hands of the assessee company in connection with the scheme for past several years. Not a single customer had demanded the money back nor the assessee had made any attempt to repay the same. It was only when the Assessing Officer in the present assessment proceedings raised the issue, the assessee made correspondence with the customers. This, the Commissioner (Appeals) correctly categorized as an afterthought. More importantly in all invoices, the signatures of the member customers were missing. Their addresses were not sufficient. Over the years, the company had also invested such amount earning interest and used such interest for its purpose, of course, offering interest income to tax. By all accounts, the assessee has treated such amount as its own. The scheme itself terminated many years back. Limitation of claiming amount back has also seized. There is absolutely no movement or correspondence between the assessee and its members with respect to the claim or with respect to the deposited amounts. - Additions confirmed - TAX APPEAL NO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the issue pertains to cessation of the assessee's liability. We are concerned with the assessment year 201213. While framing the assessment for the said year, the Assessing Officer noticed that assessee company had shown outstanding trade liability under the head 'customer advances', which included a sum of ₹ 7.87 crores (rounded off). Such advances were brought forward from the earlier years. The Assessing Officer therefore issued a show cause notice requiring the assessee to file details of such advances. In response to the queries, the assessee explained that the same were in the nature of the advances received from the retail customer under the Sales Promotion Scheme launched by the assessee in the financial year 198687. It was a scheme for sales promotion of the company's black and white TV sets. As per the scheme, the assessee had collected a sum of ₹ 500/from each customer by sale of coupons. Upon such customer enrolling four members who would purchase such coupons, he would be entitled to receive a TV set free of cost. Such newly enrolled members would also be eligible to such benefit on them in turn enrolling four new members each. 3. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stomers on these invoices. IV. The letters sent by the assessee to the past customers to show that company is still in correspondence, had all been issued by the company after commencement of the assessment proceedings and after the Assessing Officer had raised questions about the liability. V. Since financial year 200607, the total outstanding liability was shown to ₹ 7.87 crores and since then, there was no activity in connection with the scheme. The assessee was not in contact with the customers. The stand that the customers were still inquiring with the company was not established in any manner. VI. The assessee could not show even one instance where in case of even one customer, the deposit amount was returned. 6. In view of such circumstances, the Commissioner of Income Tax (Appeals) rejected the assessee's appeal placing reliance on the decision of the Supreme Court in case of CIT v. Sundaram Iyengar Sons Ltd. reported in 322 ITR 344 making following observations: 3.2.4 With all due respect to the judgments by the Hon'ble Apex Court, High Courts and Tribunals on section 41(1) and section 28(iv), I am of the view that there are situa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and the ground of appeal is dismissed. 7. The assessee carried the issue before the Tribunal. The Tribunal confirmed the view of the Revenue authorities. Hence the present appeal. 8. Learned counsel for the appellant submitted that this was not a case of cessation of liability. The conditions laid down under section 41 of the Act were not fulfilled. The authorities therefore, committed a serious error in adding the said sum to the income of the assessee. She further submitted that the ratio laid down by the Supreme Court in case of Commissioner of Income Tax v. Sugauli Sugar Works (P) Ltd reported in 1999 (1) SCR 400 would apply. She submitted that the facts in case of Sundaram Iyengar (supra) were different. Unlike in the said case, the assessee has not transferred the amount in its profit and loss accounts. Our attention was also drawn to two decisions this Court in case of Commissioner of Income TaxIII v. Bhogilal Ramjibhai Atara reported in [2014] 43 taxmann.com 55 (Gujarat) and in case of Commissioner of Income TaxII v. Nitin S. Garg reported in [2012] 22 taxmann.com 59 (Guj). 9. Facts of the present case, as concurrently held by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time the money has become the assessee's own money. What remains after adjustment of the deposits has not been claimed by the customers. The claims of the customers have become barred by limitation. The assessee itself has treated the money as its own money and taken the amount to its profit and loss account. There is no explanation from the assessee why the surplus money was taken to its profit and loss account even if it was somebody else's money. In fact, as Atkinson J. pointed out that what the assessee did was the commonsense way of dealing with the amounts. 12. It is true that unlike in case of Sundaram Iyengar (supra), the assessee has not taken such amount in its profit and loss account. Nevertheless, by all accounts, the assessee has treated such amount as its own. The scheme itself terminated many years back. Limitation of claiming amount back has also seized. There is absolutely no movement or correspondence between the assessee and its members with respect to the claim or with respect to the deposited amounts. 13. Under the circumstances, we do not see any reason to interfere. Tax Appeal is therefore dismissed. 14. In view of order passed in main ..... X X X X Extracts X X X X X X X X Extracts X X X X
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