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TMI Blog2022 (3) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... view that the set off was rightly directed to be allowed by the CIT(A). - Decided against revenue. Addition u/s 41(1) - AO was of the view that the aforesaid liability no longer existed and by virtue of the provisions of section 41(1) - HELD THAT:- Though the Revenue has contended in ground No.6 that it had requested the filing of additional evidence in the form of letter of M/s. Anushka Business Consulting, wherein they have informed the AO that they have written off the liability of the assessee in their books of accounts, there is no such discussion in the order of the CIT(A) nor was any evidence filed before the Tribunal. In the given circumstances, we are of the view that the conclusions of the CIT(A) are just and proper and call for no interference. As rightly held by the CIT(A), the fact that the debt is outstanding for a long time without any payment cannot be the basis to come to a conclusion that the said debt ceased to exist. We, therefore, confirm the order of the CIT(A). - Decided against revenue. - ITA No.1513/Bang/2019 - - - Dated:- 4-3-2022 - Shri N. V. Vasudevan, Vice President And Shri B. R. Baskaran, Accountant Member For the Assessee : Smt. Sheetha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring of appeal. 3. The assessee is a company engaged in the manufacturing and trading of high-quality electronics products such as TV, Refrigerators, AC, etc. As far as ground Nos.1, 7 and 8 are concerned, they are general in nature and do not call for any specific adjudication. Ground Nos.2 and 3 relates to the issue with regard to the claim of the assessee for set off of brought forward loss for Assessment Years 2008-09 and 2011-12 against Long Term Capital Gain (LTCG). 4. The assessee, a listed entity, was a pioneer in electronic goods and still has high Brand recall. Due to various reason, the company lost market share and incurred losses for the past many years. It had obtained a Corporate Debt Restructuring approved by the courts and based on the said order, liquidated its assets and paid off its secured lenders over a period of time. However, the balance sheet was burdened with accumulated loss. With a view to reflect the correct financial position, it approached the High Court of Kerala with a scheme of arrangement, whereby the accumulated loss was to be set off against Share premium amount reflected in the books of accounts. Based on the said order, the Share premiu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any impact while examining a claim under section 74 of the Act. 9. He held that the assessee s claim of LTCL on sale of investments, had been scrutinised by the AO, year after year and for the Asst. year 2012- 13, the said loss was determined consequent to the appellate order received in the case by passing an Order U/Section 143(3) rws 254 of the Act. Thus, the business loss and the Long Term capital loss determined in the case of the assessee are valid and determined by the successive AO's based on the examination of the facts in the scrutiny orders. 10. He held that the AO, without any material evidence, has given a finding that the assessee s claim of long-term capital loss is a colourable device to avoid payment of capital gains without taking any proper remedial action for the relevant Asst. yeas for which the said losses pertain to. If at all the AO had any doubt about the genuineness of the said loss claim of the appellant, the proper course of action is to re-open the said assessments for the purpose of determination of the allowable losses. However, the AO, without any said due process, had simply assumed the claim to be a sham transaction, which is highly impr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act, the aforesaid sums have to be added as income of the assessee. 14. Before CIT(A), the assessee submitted that the liabilities reflected in the balance sheet cannot be treated as cessation of liabilities. Merely because the liabilities are outstanding for last many years, it cannot be inferred that the said liabilities have ceased to exist. It is also a fact that the assessee has not written off the outstanding liabilities in the books of account and the outstanding liabilities are still in existence would prove that the assessee acknowledged his liabilities as per the books of account. Section 41(1) of the Act is attracted when there is cessation or remission of a trading liability. The AO shall have to prove that the assessee has obtained the benefits in respect of such trading liabilities by way of remission or cessation thereof. Merely because the assessee obtained benefit of deduction in the earlier years and balances are carried forward in the subsequent year, would not prove that the trading liabilities of the assessee have become non-existent. If a Trading Liability is being shown by an assessee in his books for years it cannot be considered as ceased merely ..... X X X X Extracts X X X X X X X X Extracts X X X X
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