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TMI Blog2020 (1) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... advertisement and marketing expenses - HELD THAT:- It is true that there is no violation of provisions of section 40A(3) of the Act. Merely because some payments were made in cash would not justify the impugned addition. It is equally true that some of the expenses were supported by internal vouchers. In our considered opinion, an addition of ₹ 1 lakh would meet the ends of justice. We, accordingly, direct the AO to restrict the disallowance to ₹ 1 lakhs. The assessee will get relief of ₹ 2 lakhs. - ITA No. 2354/DEL/2017 - - - Dated:- 31-12-2019 - Ms. Sushma Chowla, Judicial Member And Shri N.K. Billaiya, Accountant Member For the Assessee : Shri Manish Kumar, Adv. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d electrical 1823 Egl-Eagle Global logistics 110204 Era Tech Builder s I Ltd 119568 Exactway water proof co 9200 General composites p ltd 7741 Haryana Indl, Security services 38812 Jyoti Electricals store 5927 Ravika engineers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditors were static since long. The assessee was asked to show cause as to why these creditors be not treated as ceased liability and added back to the total income of the assessee u/s 41(1) of the Act. 5. In its reply, the assessee stated that it is under discussion with the parties to sort out differences which arose on account of short supply and defective goods and as the liability of the assessee to pay has not ceased to exist, the same cannot be treated as cessation of liability u/s 41(1) of the Act. 6. The submissions of the assessee did not find any favour with the Assessing Officer who made the addition of ₹ 4,17,252/- u/s 41(1) of the Act. 7. The assessee carried the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of this Section. The mere fact that the assess has made an entry of transfer in his accounts unilaterally will not enable the Depart-ment to say that Section 41 would apply and the amount should be included in the total income of the assessee. The principle that expiry of period of limitation prescribed under the Limitation Act could not extinguish the debt but it would only prevent 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 accounts 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the expenses which were not supported by bills were supported by internal vouchers. 17. Per contra, the ld. DR strongly supported the findings of the Assessing Officer. 18. We have given thoughtful consideration to the orders of the authorities below. It is true that there is no violation of provisions of section 40A(3) of the Act. Merely because some payments were made in cash would not justify the impugned addition. It is equally true that some of the expenses were supported by internal vouchers. In our considered opinion, an addition of ₹ 1 lakh would meet the ends of justice. We, accordingly, direct the Assessing Officer to restrict the disallowance to ₹ 1 lakhs. The assessee will get ..... X X X X Extracts X X X X X X X X Extracts X X X X
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