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| The Tax Publishers2019 TaxPub(DT) 6526 (Del-Trib) : (2019) 178 ITD 0272 : (2019) 202 TTJ 0308 INCOME TAX ACT, 1961
Section 41(1)
Since Revenue alleged that no confirmations from impugned creditors were made before it, whereas the assessee argued that confirmations from such creditors were made available before the Revenue authorities, the matter with regard to addition made under section 41(1) by treating the said creditors as ceased liability, was remanded to AO for considering the same afresh.
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Business income - Profits chargeable to tax under section 41(1) - Cessation of liability -
AO noted that assessee-company had static creditors, which were neither written off nor the amounts relating to it were paid in subsequent period. Further, as assessee did not furnish any confirmation from the said creditors, the AO resorting to section 41(1) treated them as ceased liability. Assessee contended that as the said liability was acknowledged in its books of account, the same could not be treated under section 41(1). Held: The impugned creditors represented amount payable to be paid only against the amount recoverable by assessee from ONGCL on settlement. Those creditors were for various material/services rendered by them to assessee during the contract, which was also a matter of dispute raised by ONGCL, and hence, the assessee would pay them only when its claims would settled with ONGCL. It was also found that the confirmations from creditors were not filed before the revenue authorities, whereas it was argued by the assessee that the confirmations were made available before the revenue authorities. Hence, the matter was remanded to AO for considering the same afresh.
REFERRED :
FAVOUR : Matter remanded
A.Y. :
INCOME TAX ACT, 1961
Section 37(1)
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