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TMI Blog2011 (7) TMI 1327X X X X Extracts X X X X X X X X Extracts X X X X ..... liability to pay the amount to the creditors have been ceased during the year under consideration. We, therefore, hold that the ld. CIT(A) is justified in deleting the addition. The amount payable to these creditors can be added to the assessee s total income in the year in which the assessee s liability to pay the amount ceases or extinguished and not in the year under consideration where assessee has admittedly shown the liability in the balance sheet. Thus, the ground raised by the revenue is rejected - Revenue Appeal Dismissed. Disallowance of salary and interest paid to partners - AO disallowed the assessee's claim by stating that in partnership deed there was no clause of quantum of salary paid and rate of interest payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PER C.L. SETHI, J.M. Both assessee and revenue are in appeal against the order dated 8th September, 2010 of ld. CIT(A) passed in the matter of an assessment made u/s 143(3) of the Income Tax Act, 1961 for A.Y. 2007-08. ITA No. 515/Del/2011: - 2. We shall first take the appeal filed by the revenue: - In this appeal, the only issue raised by revenue is against CIT(Appeals) order in deleting the addition of ₹ 12,05,268/- disallowed by the AO as unconfirmed creditors u/s 69 of the Act. 3. The assessee filed its return of income on 15.11.2007 declaring total income at ₹ 16,570/-. The case was selected for scrutiny and notice u/s 143(2) was duly issued and served upon the assessee on 26.09.2008. In the course of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal Associates, these creditors were old creditors. Detailed copy of account was supplied to the Assessing Officer. He, therefore, submitted that u/s 69A of the Act the amount can be treated to be unexplained if the same was introduced in the year of assessment. He placed reliance on the cases of Patoa Bros. Vs. CIT (1982) 133 ITR 672 (Gauh.) and Harilal Mannulal Vs. CIT 147 ITR 11 (M.P). 8. We have heard both the parties and perused the material on record. The fact that the creditors were old creditors brought forward from earlier years has not been disputed by the department. These creditors have not been introduced during the year under consideration. There is no evidence or material on record to establish that the asessee s liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the partners. The AO, therefore, disallowed the assesse s claim of payment of salary and interest to the partners. 12. On an appeal, ld. CIT(A) confirmed the AO s action by observing that the disallowance made by the AO was in consonance with the terms of the partnership deed and the reasons given by the assessee are not convincing. 13. The ld. Counsel for the assessee has submitted that the law providing payment of salary and interest to the partners was introduced in the year 1993. The assessee firm had come to an existence in 1983. Therefore, a supplementary deed of partnership was executed in 1993, and a certified copy of supplementary deed of partnership was submitted in the Financial Year 1993-94 relevant to the A.Y. 1994-95 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the A.Y. 1994-95. The AO shall examine the matter fresh and decide the same after providing reasonable opportunity of being heard to the assessee. 16. In the course of hearing of this appeal, the assessee has filed an application for admission of additional ground stating that CIT(A) has erred in not deciding the issue of addition of ₹ 17,99,444/- on account of disallowance of expenses debited to trading/profit and loss account. 17. After hearing both the parties, the additional ground raised by the assessee was admitted in as much as the identical ground was raised by the assessee before ld. CIT(A) but the assessee has failed to take this ground before us by mistake. 18. We have heard both the parties and perused the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, this ground has not been commented upon by the ld. CIT(A) by observing that the 5th ground of appeal is general in nature and calls for no comments. In the light of the facts and grounds stated before the ld. CIT(A), we are of the considered view that assessee should be allowed to raise this ground. We accordingly admit this ground and restore the same to the file of AO for his fresh adjudication after examining the books of account of the assessee and other details. The assessee shall produce all the books of accounts and vouchers before the AO in support of its claim. The AO shall decide the matter as per law after providing reasonable opportunity of being heard to the assessee. We order accordingly. 21. In the result, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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