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TMI Blog2023 (6) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... - CIT (A) following the decision of Sugauli Sugar Works (P.) Ltd [ 1999 (2) TMI 5 - SUPREME COURT] deleted the addition - HELD THAT:- In the absence of the creditor, it is not possible for the authority to come to a conclusion that the debt was barred and had become unenforceable. There may be circumstances which may enable the creditor to come with a proceeding for enforcement of the debt even after expiry of the normal period of limitation as provided in the Limitation Act. The principle that expiry of period of limitation prescribed under the Limitation Act cannot extinguish the debt but it will only prevent the creditor from enforcing the debt is well- settled. Mere entry in the books of account of the debtor made unilaterally without any act on the part of the creditor would not enable the debtor to say that the liability had come to an end. Apart from that that would not by itself confer any benefit on the debtor as contemplated by the section. Therefore, as right in holding that the assessee's unilateral entry in the accounts transferring the amount to the capital reserve account would not bring the matter within the scope of section 41. - Decided against revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - made by the Assessing Officer treating the agricultural income as business income. The assessee is engaged in the business of manufacture and sale of sugar filed its return of income on 19.09.2015 declaring loss of Rs.24,89,78,279/- for the assessment year 2015-16. In the course of assessment proceedings the assessee was show caused as to why the agricultural income earned by the assessee should not be treated as an ancillary activity linked to the business of manufacture and sale of sugar as the final product of which is the sugar and its by products and why its by-products should not be treated as part of business. The assessee contended that it cultivates the sugar seeds on the agricultural land situated in Punjab and furnished copy of Khasra khatauni for perusal of the Assessing Officer. It was also contended that the cultivation of activities carried out by the assessee company to sow sugar cane seeds is purely an agricultural activity and hence the company satisfies the condition of section 2(1A) of the Act. It was contended that revenue from sale of sugar seeds cannot be treated as taxable business income. It was also contended that the assessee possess its agricultural la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue without any adverse finding and the same has been treated as agriculture income. The details of the same extracted from submission of the appellant is as follows: A.Y. Income Returned In INR (Loss) Income Assessed In INR (Loss) Agriculture Income as per ITR Accepted Agriculture Income under assessment Assessed under section 2011-12 (21,41,829) (21,41,829) 2,18,80,000 2,18,80,000 143(3) 2012-13 (4,07,19,780) (4,07,19,780) 2,98,34,098 2,98,34,098 143(1) 2013-14 NIL NIL 5,22,46,970 5,22,46,970 143(3) 2014-15 NIL NIL 8,18,62,303 8,18,62,303 143(1) 4.10 In view of my detailed deliberation on facts as above, judicial precedents relied by the AO being distinguished on facts and foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not see any valid reasons to deviate from the stand taken by the revenue from earlier years as there was no change in facts. Ratio of the decision of the Hon ble Supreme Court in the case of Radhasoami Satsang Vs. CIT (supra) was rightly applied by the ld. CIT (Appeals). Thus, we sustain the order of the ld. CIT (Appeals) and reject the ground raised by the Revenue. 7. Coming to ground No. 2 of the grounds of appeal of the Revenue it is directed against deletion of addition of Rs.6,72,537/- made under section 41(1) of the Act in respect of outstanding balances in sundry creditors accounts. While completing the assessment the Assessing Officer noticed that there are outstanding sundry credits for more than three years and since the assessee has not shown any steps have been taken for recovery, any legal proceedings are pending he concluded that these balances are no longer payable and brought to tax under section 41(1) of the Act. 8. On appeal the ld. CIT (Appeals) following the decision of the Hon ble Supreme Court in the case of CIT vs Sugauli Sugar Works (P.) Ltd. [102 taxmann 713 (SC)] deleted the addition observing as under:- 8.1 I have considered the fact of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmal period of limitation as provided in the Limitation Act. The principle that expiry of period of limitation prescribed under the Limitation Act cannot extinguish the debt but it will only prevent the creditor from enforcing the debt is well- settled. Mere entry in the books of account of the debtor made unilaterally without any act on the part of the creditor would not enable the debtor to say that the liability had come to an end. Apart from that that would not by itself confer any benefit on the debtor as contemplated by the section. Therefore, the High Court was right in holding that the assessee's unilateral entry in the accounts transferring the amount to the capital reserve account would not bring the matter within the scope of section 41. Accordingly, the appeal was to be dismissed. 8.4 In view of the above deliberation and relying on the judicial precedents, the addition of Rs.672537/- which is still recognized in the books of accounts of the appellant company is directed to be deleted. Hence, the ground of appeal is upheld. 9. On careful consideration of the observations and findings of the ld. CIT (Appeals) we do not see any infirmity in the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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