ITO Wd 11(1),, Pune v. Meshwell Auto pvt. Ltd.,, Pune

ITA 1087/PUN/2009 | 2005-2006
Pronouncement Date: 18-03-2011 | Result: Dismissed

Appeal Details

RSA Number 108724514 RSA 2009
Assessee PAN AABCM1822G
Bench Pune
Appeal Number ITA 1087/PUN/2009
Duration Of Justice 1 year(s) 6 month(s) 3 day(s)
Appellant ITO Wd 11(1),, Pune
Respondent Meshwell Auto pvt. Ltd.,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 18-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 18-03-2011
Assessment Year 2005-2006
Appeal Filed On 14-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A : PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JM AND SHRI D. KARUNAKARA RAO. AM I.T.A. NO. 1087/PN/2009 : A.Y. 2005-06 I.T.O. WARD 11(1) PUNE APPLICANT VS. MESHWELL AUTO PVT. LTD. 1274 SADASHIV PETH PUNE-411 030 PAN AABCM 1822 G RESPONDENT APPELLANT BY : SHRI ABHAY DAMLE RESPONDENT BY: SHRI R.G. NAHAR ORDER PER SHAILENDRA KUMAR YADAV THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A)I PUNE DATED 6-7-2009 FOR A.Y. 2005-06 WHEREIN THE DELETION OF ADDITION MADE BY THE ASSESS ING OFFICER OF RS. 11 50 000/- U/S 41(1) ON ACCOUNT OF CESSATIO N OF LIABILITY HAS BEEN OPPOSED. 2. THE ASSESSING OFFICER NOTICED THAT DURING THE AS SESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE HAS SHOWN LI ABILITY TO THE EXTENT OF RS. 11 50000/- UNDER THE HEAD SUNDRY CREDITORS WHICH WAS FOUND TO BE CARRIED FORWARD FR OM THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. IN THIS REG ARD THE ITA NO. 1087/PN/09 MESHWELL AUTO P. LTD. A.Y. 2005-06 - 2 - STAND OF THE ASSESSEE WAS THAT THE SAID AMOUNT WAS PAYABLE TO DEVILKOL ENGG. PVT. LTD. AGAINST DEPOSIT TAKEN FRO M THEM IN LIEU OF CERTAIN TOOLS AND EQUIPMENTS OBTAINED FROM THE ASSESSEE FOR USE. SINCE THE SAID PARTY FAILED TO R ETURN THE EQUIPMENTS TAKEN THE ASSESSEE WAS FORCED TO WITHHO LD THIS AMOUNT. HOWEVER THE ASSESSING OFFICER OBSERVED TH AT THE ASSESSEE COULD NOT SUBSTANTIATE THE CESSATION OF LI ABILITY AND HAS OBTAINED THE BENEFIT IN RESPECT OF TRADING LIAB ILITY BY CESSATION OF LIABILITY U/S 41(1) OF THE ACT. ACCORD INGLY ADDITION WAS MADE. IN APPEAL THE CIT(A) GRANTED RELIEF. T HE SAME HAS BEEN OPPOSED BY THE REVENUE BEFORE US. THE STAND OF THE REVENUE IS THAT THE CIT(A) WAS NOT JUSTIFIED IN DEL ETING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 11 50 000/- U/S 41(1) OF THE ACT ON ACCOUNT OF CESSATION OF LIABILI TY. ON THE OTHER HAND THE LEARNED AR SUPPORTED THE ORDER OF T HE CIT(A). 3. AFTER HEARING BOTH THE PARTIES AND GOING THROUGH THE MATERIAL ON RECORD WE ARE NOT INCLINED TO INTERFER E WITH THE FINDING OF THE CIT(A). THE PRE-CONDITIONS FOR THE APPLICABILITY OF SECTION 41(1) OF THE ACT ARE (1) AN ALLOWANCE OR DEDUCTION HAS BEEN MADE IN RESP ECT OF LOSS EXPENDITURE OR TRADING LIABILITY INCURRED BY THE ASSESSEE IN THE ASSESSMENT YEAR; AND (2) IN A SUBSEQUENT YEAR THE ASSESSEE OBTAINS EITHE R IN CASH OR ANY OTHER MANNER WHATSOEVER ANY AMOUNT ITA NO. 1087/PN/09 MESHWELL AUTO P. LTD. A.Y. 2005-06 - 3 - IN RESPECT OF SUCH LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY W AY OF REMISSION OR CESSATION THEREOF. 4. AS PER RECORD THE ASSESSING OFFICER HAS FAILED TO ADDUCE ANY EVIDENCE TO ESTABLISH THAT THE SAID LIABILITY H AS BEEN EVER CLAIMED AS DEDUCTION PREVIOUSLY. IT IS CLEAR FROM T HE RECORD THAT THE LIABILITY IN RESPECT OF WHICH THE ASSESSIN G OFFICER HAS MADE ADDITION U/S 41(1) IS APPEARING IN THE BALANCE SHEET AS ON THE LAST DAY OF THE PRECEDING FINANCIAL YEAR. N O COGENT EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSIN G OFFICER IN SUPPORT OF HIS CONCLUSION THAT THE LIABILITY OF RS. 11 50 000/- AS APPEARING IN THE BOOKS OF THE ASSESS EE CEASED TO BE IN EXISTENCE. TAKING INTO ACCOUNT ALL THESE ASPECTS OF THE MATTER THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF CESSATION OF LIABILITY SHOWN BY THE ASSESSEE AT RS. 11 50 000/- U/S 41(1) IS NOT JUSTIFIED. THE SAME IS UPHELD. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH 2011. SD/- SD/- (D. KARUNAKARA RAO) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED THE 18 TH MARCH 2011 ANKAM ITA NO. 1087/PN/09 MESHWELL AUTO P. LTD. A.Y. 2005-06 - 4 - COPY OF ORDER FORWARDED TO : 1. ASSESSEES 2. DEPARTMENT 3. CIT - I PUNE 4. CIT(A) I PUNE 5. ITAT D.R. A BENCH PUNE. TRUE COPY BY ORDER ASSTT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE.