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TMI Blog2017 (8) TMI 1442X X X X Extracts X X X X X X X X Extracts X X X X ..... iation claimed on hotel building without appreciation that related investment in the building was not explained since only bogus bills were arranged for construction expenses? In DBITA No. 167/2011 i) Whether in the facts and circumstances of the case the ITAT was justified in deleting the addition of ₹ 1,45,45,000/- made by the Assessing Officer on account of cessation of liability u/s 41(1) of the I.T. Act. ii) Whether in the facts and circumstances of the case the ITAT was justified in deleting the addition of ₹ 1,07,64,515/- made by AO by way of disallowance of depreciation claimed on hotel building without appreciating that related investment in the building was not explained since only bogus bills were arranged for construction expenses? In DBITA No. 321/2011 Whether in the facts and circumstances of the case the ITAT was justified in deleting the additions made u/s 68 of the Act of unexplained cash credits for which the assessee could not discharge the burden of proving creditworthiness of creditors and genuineness of transactions. Counsel for the respondent contended that issue is now squarely covered by the decision of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not apply to which legal position is constituted (sic-conceded) by the learned Counsel for the revenue before us, the revenue still wants that the addition be sustained under provisions of Clause (iv) of Section 28 of the Act. The revenue is not disputing the facts on the basis of which decision of the Tribunal is based. Submission is that on these very facts, provisions of Section 28(iv) of the Act shall be attracted. It is a pure question of law and therefore, the amended ground as raised by the revenue can be allowed. The position in MCorp Global (P) Ltd. (supra) was entirely different. In that case, the transaction in question was treated as lease transaction in the earlier assessment years and depreciation was granted on that basis. However, in the assessment year in question, the same very transaction was treated as financial transaction and depreciation was disallowed. It was in this backdrop, the Supreme Court opined that the depreciation given to the assessee could not be withdrawn, (sic) when the finding of fact that the transaction in question was leased and not financial transaction had become final and had not been challenged. 8. With this, we proceed to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruing to him on account of cessation or remission of trading liability. U will be a case which squarely falls under the earlier clause, namely, obtained any amount in respect of such expenditure . In other words, where expenditure is actually incurred by reason of payment of duty on goods and the deduction or allowance had been given in the assessment for earlier period, the assessee is liable to disgorge that benefit as and when he obtains refund of the amount so paid. The consideration whether there is a possibility of the refund being set at naught on a future date will not be a relevant consideration. Once the assessee gets back the amount which was claimed and allowed as business expenditure during the earlier year, the deeming provision in Section 41(1) of the Act comes into play and it is not necessary that the Revenue should await the verdict of higher Court or Tribunal. If the Court or Tribunal upholds the levy at a later date, the assessee will not be without remedy to get back the relief. 5.1 He also relied upon the decision of Supreme Court in CIT vs. T.V. Sundaram Iyengar and Sons Ltd. (1996) 222 ITR 344 wherein it has been held as under:- The principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchased for leasing business and one of the parties to whom the cylinders were leased out is the manufacture and seller of the cylinders. 9. It is further stated that the cylinders were dispatched to the other party only a day before the closing of the accounting period. 10. The aforesaid reasons given by the Income Tax Appellate Tribunal and the High Court in denying the depreciation do not appear to be valid reasons in law. Insofar as the purchase of gas cylinders by the Assessee is concerned, this fact is not disputed. It is also not disputed that these gas cylinders were purchased for business purpose. In fact, the plea of the Assessee that since manufacturing unit had not started functioning and this necessitated the Assessee to lease out these gas cylinders to the aforesaid two parties to enable it to earn some income, rather than keeping those cylinders idle, is also not in dispute. On the contrary, as mentioned above, the income which is generated from leasing out those gas cylinders is treated as business income . Once the income from leasing those gas cylinders is accepted as the business income , which is taxed at the hands of the Assessee as such, we see no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court were well justified in coming to the conclusion that the purchase tax liability of the assessee had not ceased finally during the year in question. Despite the finality attained by the judgment in Neroth Oil Mills'case, the other issues having bearing on the exigibility of purchase tax still remained and the dispute between the assessee and the sales-tax department was still going on. There is no material on record to rebut these factual observations made by the Tribunal. Nor can it be said that the reasons given by the Tribunal are irrelevant. 5. The learned senior counsel appearing for the Income Tax Department has contended that the assessee itself took steps to write-off the liability on account of purchase tax by making necessary adjustments in the books, which itself is indicative of the fact that the liability ceased for all practical purposes and therefore, the addition of amount of ₹ 3,20,758/- deeming the same as income of the year 1985-86 under Section 41(1) is well justified of the Act. But, what the assessee has done is not conclusive. As observed by the Tribunal, an unilateral action on the part of the assessee by way of writing-off the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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