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TMI Blog2013 (11) TMI 1710X X X X Extracts X X X X X X X X Extracts X X X X ..... under :- The commission of ₹ 17,91,334/- is unpaid to Mr Ashwin Pare/, as the said party has not performed the work as decided earlier. Later on, the payment could not be made because of liquidity crunch. We intend to make this payment in current year as soon as possible. Further from the details produced by the assessee it is seen that the liability is outstanding from F.Y. 2002-03 i.e. ₹ 1,71,267/- and F.Y. 2003-04 i.e. ₹ 16,20,067/-. This fact is also apparent from the records, wherein the outstanding liability is appearing in the balance sheet of the assessee from A.Y. 2004-05, though the assessee has debited these expenses in the P L A/c. for the relevant years. 4.2. Here it is pertinent to go through the provision of the section 41(1) of the Act, relevant portion is which reproduced as under:- Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the firstmentioned person) and subsequently during any previous year- (a) the first mentioned person has obtained, whether in cash or any in any other manner whatsoever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Nitin S. Garg Tax Appeal Nos. 2428 2431 of 2010 dated 11th April, 2012 [2012] 22 taxman.com 59 (Guj) wherein following was held. It had not been established that the assessee had written off the outstanding liabilities in the books of account. The Tribunal was justified in taking the view that the assessee had continued to show the admitted liabilities in its balance sheet, the same could not be treated as cessation of liabilities. Merely because the liabilities were outstanding for last many years, it could not be inferred that the said liabilities has ceased to exist. The Tribunal had rightly observed that the Assessing Officer would have to prove that the assessee had obtained the benefits in respect of such trading liabilities by way of remission or cessation thereof. Merely because the assessee obtained benefit of reduction in the earlier years and balance was carried forward in the subsequent year, it would not prove that the trading liabilities of the assessee had become non-existent. [Para 15] In view of aforesaid, impugned order passed by the Tribunal was to be upheld. We feel no need to interfere with the order passed by Ld CIT(A) and the same is hereby uphe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pahilajraj Jaikishin PJ-85 84428 26/2/08 Koshambh Mutitread Pvt Ltd DN-8CR/GF 155677 Total 13,77,870/- On verification of certain debit notes, stated to have been issued by Pahillaraj Jaikishan which is showing shortage against bills, How ever on verification of the details furnished by the assessee in fact the assessee has received job work amount 1,43,84,589/- on various date and the corresponding TDS of ₹ 3,26,531/- was duly claimed by the assessee towards prepaid taxes and claimed as refund. Thus it is a job work which is a receipt and part and parcel of the sale. Any deficiency /increase/ adjustment/ reconciliation with regards such transactions have to be dealt with sales/Job work as the case may be. Any such debit note if at all genuine will effect the sale which may increase or decrease. But at the same time the assessee is trying to increase the purchases by showing it as expense is not correct. In so for as if at all the assessee has purchased the goods from the said pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s purchases not vouched or explained properly. Penalty proceeding u/s 27l(i)(c) initiated for furnishing in accurate particulars and concealment of Income. 9. Ld. CIT(A) deleted this addition by observing as under:- 2.2 I have carefully considered the rival contentions. It is seen that the appellant has debited a sum of ₹ 13,77,870/- in the account Purchase DN Grey A/c. In this account the appellant has debited various shortages pointed out by the clients in the job work done by the appellant and the same corresponds to shortage of grey cloth. The A.O. is of the view that the shortage of grey cloth if any pertains to the job work and the same should be debited to the sales account so that the sale proceeds are reduced. On the other hand the appellant has debited this shortages in the P L A/c. The A.O. has failed to bring any material on record to prove that these debit notes are not genuine and the shortage as evidenced by these debit is bogus. In my considered view acknowledging shortage by issuing debit notes is an accepted mode and I do not find any irregularity in acknowledging the shortage by issuing debit notes. Since the A.O. has failed to disprove the gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08. Thereby unjust enrichment is happening to the assessee by the wrong claim of a liability or excess claim equally it might be compensated b way excess of cash/stock/inventory and any other asset form. It is finding place in Balance sheet, but at same time profit is affected because of its existent to that extant. Therefore the assessee's claim, that it was paid off by sister concern will not have any relevance. Further the assessee is getting benefit from the non payment of the creditors even after 3 years. Therefore the same is considered for addition, as the business gained by virtue of unilateral act by the assessee, therefore the same is considered for addition. Ld. CIT(A) has deleted this addition by following his predecessor s order in assessee s own case for A.Y. 2006-07 which has been upheld by us vide ITA No. 3338/Ahd2010, therefore we feel no need to interfere with the order passed by him and the same is hereby upheld. 13. Third ground relates to deleting the disallowance of interest of ₹ 9,34,300/- 14. AO while making this addition has observed as under:- 5. Addition on account of interest not charged on Advances: On perusal of Balance sheet of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards secured and unsecured loans and in the light of assessee's submission it is observed that interest is not charged from the parties or persons through mutual convenience and accommodation. In view of the above discussion, interest @12% is charged on Loans and advances ₹ 77,86,005/-amonnting to ₹ 9,34,320/- is added to the total income of the assessee. 15. Ld. CIT(A) has deleted this addition by observing as under:- 6.3 I have carefully considered rival submissions. I have also perused evidences furnished by the appellant and the case laws relied upon by the ld.A.R. It is seen that interest expenses of ₹ 9,34,320/- was disallowed u/s.36(1)(iii) of I.T. Act. As per the provisions of section 36(1)(iii), to claim interest expenses, following conditions should be fulfilled. (i) The Assessee must have borrowed money (ii) The interest should have been payable (iii) Borrowing should be made for the purpose of business. In my considered view, appellant has fulfilled all the above conditions and accordingly it is entitled to claim deduction u/s. 36(1)(iii) of I.T.Act against interest payment. Perusal of the assessment order reveals that the A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered in the name of the partner of the firm and hence assessee cannot be considered as the legal owner of the vehicle. The ownership in the legal context means that the asset, under consideration, should be bought and registered in the name of the assessee, then only it would qualify the Ownership aspect. While dealing with the similar issue, the territorial jurisdictional High Court in the case of CIT Vs Bordubi Rice Mills, reported in 105 ITR 739, has held that in the eyes of law, there cannot be more than one owner for different purpose. Under such circumstances, the depreciation cannot be allowed in the firm s case, when the car was registered in the name of the partner. While following the above ruling and considering the fact that since the car was bought and registered in the name of one of the partner, thus for all legal and practical purposes, the ownership of the same was bestowed with the partner only and, therefore, it cannot be claimed as assessee's own assets under the IT Act. Since the assessee has failed to qualify one of the basic criteria to claim the depredation, stipulated u/s 32 of the Act. Therefore, the depreciation claim of ₹ 2,93,169/- made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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