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TMI Blog2017 (10) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... 41(1) of the Act was not attracted. Thus, when the liability qua the amount which was still standing in the balance sheet of the assessee, which fact had not been disputed by the Assessing Officer, the same could not be said to have ceased. Thus, the Tribunal did not interfere with the findings recorded by the CIT(A) on this issue. Addition on account of VRS expenses - deduction u/s 35DDA - Assessing Officer showed that addition had been made merely on the basis of wrong interpretation of the provisions contained in Section 35DDA - Held that:- Any deduction claimed for the financial year 2000-01 in question under Section 35DDA of the Act was to be considered for the assessment year 2001-02, when undisputedly, Section 35DDA was incorporated in the statute w.e.f. 01.04.2001. Thus, the assessee was certainly entitled to get the benefit for the same. Moreover, the Assessing Officer had allowed VRS payment in the earlier year and deduction claimed in the year under consideration was only a consequential relief for the 5th year. Further, Section 35DDA of the Act did not preclude the assessing authority to consider the VRS payment as revenue expenditure. Thus, the Tribunal rightly up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss at ₹ 49,32,857/- and taxable income (other than business income) at ₹ 2,36,73,360/- under Section 143(3) of the Act. Certain additions were made by the Assessing Officer. The relevant for the purposes of this appeal would be that amount of ₹ 90,97,536/- was added on account of bad debts written off; ₹ 15,55,893/- on account of cessation of liability under Section 41(1) of the Act and ₹ 10,02,735/- on account of VRS expenses. Among various additions made by the Assessing Officer as noticed above, relief was allowed by the Commissioner of Income Tax (Appeals) [CIT(A)] in respect of these additions made by the Assessing Officer vide order dated 09.03.2009, Annexure A.II. The revenue filed an appeal before the Tribunal. Vide order dated 20.01.2016, Annexure-III, the Tribunal dismissed the appeal inter alia on the ground that the Assessing Officer had added an amount of ₹ 90,97,536/- on account of bad debts written off during the year under consideration on the ground that the assessee had failed to prove that the written off bad debts had actually become bad. The CIT(A) deleted the addition of ₹ 90,97,536/- made by the Assessing Officer rely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6(2) of the Act, the disallowance of ₹ 90,97,536/- was deleted. The relevant findings recorded by the CIT(A) in this regard read thus:- I have carefully considered the submissions of the Ld. A.R. and perused the order of assessment. I find that the A.O is oblivious of the amendments made by the Finance Act with effect from 01.04.1989 which have been explained by the CBDT s circular No.551 dated 23.01.1990 vide para 6.6 wherein it has been mentioned that the amendment was to rationalize the provisions regarding the allowbility of all debts. It was laid down that the assessee has only to write off debts as irrecoverable in its accounts and was not required to prove that they had become bad. This law has been followed by the Hon ble Delhi High Court in the following cases:- (i) Commissioner of Income Tax Vs. Global Capital Limited (2008) 306 ITR 332(Delhi) (ii) Commissioner of Income Tax Vs. Autometers (2007) 292 ITR 345 (Delhi) (iii) Commissioner of Income Tax Vs. Morgan Securities and Credits Private Limited (2007) 292 ITR 339 (Delhi) Therefore, keeping in view the above submissions of the Ld. A.R., both on merits and law i.e. Section 36(1)(vii) re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vent the creditor from enforcing the debt, has been well settled. If that principle is applied, it is clear that mere entry in the books of account of the debtor made unilaterally without any act on the part of the creditor will not enable the debtor to say that the liability has come to an end. Apart from that, that will not by itself confer any benefit on the debtor as contemplated by the section. The decision of the Calcutta High Court in CIT Vs. Sugauli Sugar Works Private Limited 140 ITR 286 affirmed. 15.1 The issue to be decided by the Tribunal is squarely covered by the judgment cited as Sugauli Sugar Works Limited (supra) because merely by virtue of fact that a debt become time barred the right of the creditor will not come to an end nor the liability will cease and in these circumstances, Section 41(1) of the Act is not attracted. So, when the liability qua the amount which is still standing in the balance sheet of the assessee, which fact has not been disputed by the A.O, the same cannot be said to have ceased. So, we are of the considered view that there is no scope to interfere in the findings returned by Ld. CIT(A). Hence, ground No.5 is determined against the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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