ACIT CEN CIR 34, MUMBAI v. SHARAD S. RUIA, MUMBAI

ITA 4423/MUM/2012 | 2009-2010
Pronouncement Date: 19-10-2016 | Result: Dismissed

Appeal Details

RSA Number 442319914 RSA 2012
Assessee PAN AAEPR0211Q
Bench Mumbai
Appeal Number ITA 4423/MUM/2012
Duration Of Justice 4 year(s) 3 month(s) 20 day(s)
Appellant ACIT CEN CIR 34, MUMBAI
Respondent SHARAD S. RUIA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 21-07-2016
Date Of Final Hearing 28-07-2015
Next Hearing Date 28-07-2015
Assessment Year 2009-2010
Appeal Filed On 29-06-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH ES E MUMBAI BEFORE SHRI RAJENDRA HONBLE ACCOUNTANT MEMBER AND SHRI C.N. PRASAD HONBLE JUDICIAL MEMBER ITA NO. 4423 / MUM /201 2 (ASST. YEAR : 200 9 - 1 0 ) ACIT CENTRAL CIRCLE - 34 MUMBAI. VS. SHARAD S. RUIA D - 704 VASTU PARK EVERSHINE NAGAR MALAD (W) MUMBAI - 95 PAN NO. AAEPR 0211 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.C. TIWARI ADV. DEPARTMENT BY : SHRI MANJUNATHA SWAMY - D R DATE OF HEARING : 21 / 0 7 /201 6 . DATE OF PRONOUNCEMENT : 19 / 1 0 /201 6 . O R D E R PER C.N. PRASAD JUDICIAL MEMBER THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD.CIT(A) - 41 MUMBAI DATED 25/04/2012 FOR THE ASSESSMENT YEAR 2009 - 10 ARISING OUT OF THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT. 2. THE ONLY GRIEVANCE OF THE REVENUE IN ITS APPEAL IS THAT THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1 27 00 000/ - MADE ON ACCOUNT OF CESSATION OF LIABILITY. 3 . BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME ON 27/10/2009 DECLARING INCOME OF RS. 1 88 840/ - . THE ASSESSMENT WAS COMPLETED BY ORDER DATED NIL UNDER SECTION 2 ITA NO. 4423 / MUM /201 2 143(3) DETERMINING TOTAL INCOME AT RS. 1 29 15 922/ - . WHILE COMPLETING THE ASSESSMENT THE ASSESSING OFFICER ADDED RS.1 27 00 000/ - AS INCOME OF THE ASSESSEE BY TREATING IT AS CESSATION OF LIABILITY . THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN THIS AMOUNT AS DUE TO M/S. NIRMA CONSULTANCY PVT. LTD. UNDER THE HEAD LIABILITIES . HE ALSO OBSERVED THAT THE ASSESSEES SON IS THE DIRECTOR OF M/S. NIRMA PLASTIC TILES PVT. LTD. AND M/S. NIRMA PLASTIC TILES PVT. LTD. IS A DEFUNCT COMPANY AND THE ASSESSEE NEED NOT PAY BACK THE LIABILITY TO THE SAID COMPANY. THEREFORE HE WAS OF THE VIEW THAT THERE IS A CESSATION OF LIABILITY AND ACCORDINGLY MADE THE ADDITION. 4 . ON APPEAL LD. CIT(A) CONSIDERING THE FACT THAT THE ASSESSEE HAS REPAID THE LIABILITY DURING THE CURRENT YEAR AND SINCE THE ASSESSEE HAS NOT CLAIMED THE SAID AMOUNT AS DEDUCTION AND SI NCE THE LIABILITY IS OUTSTANDING FOR LAST TEN YEARS AND THE ASSESSEES S ON IS DIRECTOR IN THE COMPANY HE HELD THAT IT CANNOT BE A REASON FOR INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT. 5. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHEREAS AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A). 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW . THIS ISSUE HAS BEEN ELABORATELY CONSIDERED BY THE LD. CIT(A) WITH REFERENCE TO THE AVE RMENTS OF THE ASSESSING OFFICER T HE SUBMISSIONS OF THE ASSESSEE AND THE EVIDENCE PLACED ON RECORD . T HE LD. CIT(A) HELD THAT THERE IS NO CESSATION OF LIABILITY AND THEREFORE THE PROVISIONS OF SECTION 41(1) OF THE ACT CANNOT BE INVOKED BY OBSERVING AS UNDER: - 2 . 4 I HAVE CONSIDERED THE SUBM I SSIONS OF THE APPELL ANT ORDER OF THE A.O. AND FACTS OF THE CASE CAREFULLY IT IS NOTICED THAT THE A.O. 3 ITA NO. 4423 / MUM /201 2 HAS OBSE R VED THAT THE ASS E SSEE HAS SHOWN LIABILITY OF RS. 1 . 27 CRORES WHICH I S OUTSTANDING SINCE A.Y. 2001 - 02 . SECONDLY THE A . O. HAS OBSERVED THAT M/ S. NIRMA PLASTIC TILES PVT. LTD. IS A DE FU NCT COMPANY AND THEREFORE VIRTUALLY NON - EXIS TE NCE . THIRDLY IT WAS NOTICED THAT THE COMPANY WAS OWNED BY SON OF THE ASSESSE E. IN V I EW OF THESE FACTS THE A.O . HAS GIVEN A SHOWN CAUSE NOTICE TO THE ASSESSEE TO E XPLAIN WHY THE OUTSTANDING LIABILITY MAY NOT BE TREATED AS CEASED TO EXIST AND ADDED BACK TO THE TAXABLE INCOME. IN RESPONSE TO THIS SHOW CAUSE NOTICE THE A.R. OF THE APPELLANT HAS SUBMITTED ITS R EP L Y BEFORE THE A.O . AND SUBMITTED THE CON F IRMAT I ONS OF M / S . NIRMA PLASTIC TILES PVT . LTD. ALONG WITH BALANCE SHEET OF THE COMPANY AND ARGUED THAT THE LIABILITY SHOWN BY THE ASSESSEE IS REFLECTED IN THE BALANCE SHEET OF THE COMPANY AND BOTH THE PARTIES ARE REFLECTING THIS ENTRY IN THEIR BOOKS OF ACCOUNTS AND NO ON E HAS WRITTEN OFF THEREFORE THE PROVISION OF SECTION 41(1) ARE NOT APP L ICABLE. BUT THE A.O. HAS NOT ACCEPTED THE REPLY OF THE ASSESSEE AND HELD THAT THE COMPANY WAS A DEFUNCT COMPANY AND OWNED BY SON OF THE ASSESSEE AND THE LIABIL I TY WAS OUTSTAND I NG IN TH E A.Y . 2001 - 02 THEREFORE TREATED IT AS CEASED TO EXIST AND ADD E D BACK TO THE TAXABLE INCOM E. 2 . 5 ON THE OTHER HAND THE A.R. OF THE APPELLANT HAS SUBMITTED THAT THE CONFIRMATIONS OF THE COMPANY ALONG W I TH BALANCE SHEET WERE DULY SUBM I TTED BEFORE THE A.O. TO PROVE THAT THE OUTSTANDING LIAB I L I TY OF THE ASSESSEE IS DULY REFLECTED IN THE BALANCE SHEET OF THE COMPANY AND IT WAS NOT WRITTEN OFF BY ANY OF THE PARTY THEREFORE THE PROVISION OF SECTION 41(1) IS NOT APPLICABLE. THE A.R. OF THE APPELLANT HAS ALSO RE LIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SUGUALI SUGAR WORKS PVT. LTD . (SUPRA) AND ALSO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF C IT VS . HOTL I NE E L ECTRONICS LTD. IN WHICH THE DECISION OF THE HON ' BLE SUPREME COURT WAS RELIED ON. THUS IT WAS A R GUED THAT THE FACTS OF THE PRESENT CASE ARE SQUARELY COVERED BY T HE HON ' BLE SUPREME COUR T TH ER EFORE NO ADDITION IS CAL L E D F OR. 2.6 FROM THE PERUSAL OF THE S UBM I SS I O N S OF THE APPE LL AN T AND FACTS OF THE CASE IT IS BETTER TO READ OUT THE PROVISION OF SECT I ON 41WHICH IS REPRODUCED AS UNDER: '41 . PROFITS CHARGEABLE T O TA X . (1) WHERE AN A L LO W A NC E OR DE DUCT I ON H A S BEEN MADE I N THE ASSESSMENT FOR ANY YEAR I N RESPECT OF LOSS E X PE ND I TURE OR TRA DIN G LI ABIL ITY INC U RRE D B Y THE ASSESSEE (HERE I NAFTER REFERRED TO AS THE FIR ST - MENTIONED PER SON ) AND SUBSEQUENTL Y DURING ANY PREVIOUS YEAR (A) THE FIRST - MENTIONED PERS O N HA S OBTAINED WHETHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER AN Y AMO UNT I N RESPECT OF SUCH LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF SU CH TRAD I NG L I AB ILI TY B Y W A Y OF 4 ITA NO. 4423 / MUM /201 2 R E M I SS I ON OR CESSATION THEREOF THE AMOUNT OBTAINED B Y S UCH P ERSON OR TH E V ALUE O F BENEF I T ACCRUING TO HIM SHALL BE DEEMED TO BE PR OF I TS AND G AINS O F B U SI NE S S OR P R OFESSION AND ACCORDINGL Y CHARGEABLE TO I N C OME - T A X AS THE I N COME OF T H E PRE VIO U S YE AR WHETHER THE BUSINESS OR PROFESSION IN RESPECT OF WH I CH T H E A LL OWANCE OR DEDUCTION HAS BEEN MADE IS IN EXISTENCE IN THAT YEAR OR NOT ; OR (B) .............. . EXPLANAT I ON 1 EXPLANATION 2 .. 2.7 THE GIST OF THE DECISION OF THE HON'B L E SUPREME COURT IN THE CASE OF SUGUALI SUGAR WORKS PVT. LTD. WHICH IS FOL L OWED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. HOTLINE ELECTRONICS LTD. (SUPRA) I S REPRODUCED AS UNDER: IN OUR OPINION THE INTERPRETATION PLACED BY THE TRIBUNAL ON SECTION 41 (1) OF THE ACT IS IN CONFORMITY WITH THE LEGAL POSITION THAT UNLESS THERE IS EVIDENCE TO SHOW THAT THE CREDITOR HAS REMITTED THE DEBT OR OTHERWISE BY OPERATIO N OF LAW THE LIABILITY TO PAY HIM HAS CEASED THERE CAN BE NO BENEFIT ARISING TO THE ASSESSEE WITHIN THE MEANING OF CLAUSE (A) OF SECTION 41 (1). THE TRIBUNAL IS ALSO RIGHT IN ITS VIEW THAT UNLESS NOTICES WERE ISSUED TO THE CREDITORS AND THEY HAD STATED T HAT THEY HAVE GIVEN UP THE CLAIMS AGAINST THE ASSESSEE NO DECISION CAN BE TAKEN BY THE INCOME TAX AUTHORITIES MERELY ON THE GROUND THAT THE DEBTS REMAINED UNPAID IN THE ASSESSEE'S BOOKS FOR A NUMBER OF YEARS THAT THE LIABILITY HAS CEASED OR HAS BEEN REM ITTED. IN THE PRESENT CASE THE ASSESSING OFFICER HAS NOT ISSUED 'ANY NOTICE TO THE CREDITORS TO CONFIRM FROM THEM WHETHER THEY HAVE GIVEN UP THEIR DUES FROM THE ASSESSEE. IT MUST BE REMEMBERED THAT THE DEBTS WERE NOT WRITTEN BACK IN THE ASSESSEE'S ACCOUNTS AS FOUND BY THE TRIBUNAL. EXCEPT FOR THE FACT THAT THE AMOUNTS WERE O UTSTANDING THERE WAS NO MATERIAL OR EVIDENCE TO SHOW THAT THERE WAS REMISSION OR CESSATION OF LIABILITY. IT IS THE ASSESSING OFFICER WHO HAS INVOKED SECTION 41(1). IT IS HE WHO HAS STAT ED THAT THERE WAS A REMISSION OR CESSATION OF THE ASSESSEE'S LIABILITY. IT WAS THEREFORE INCUMBENT UPON HIM TO MAKE INQUIRY AND BRING ON RECORD MATERIAL. BY VIRTUE OF THE POWERS VESTED IN HIM UNDER SECTION 133(6) OR ANY OTHER PROVISION OF THE INCOME TAX ACT TO SEEK CLARIFICATION OR CONFIRMATION FROM THE CREDITORS THE SAID MATERIAL/EVIDENCE COULD HAVE BEEN ASCERTAINED. THE ASSESSEE HEREIN IS A LIMITED COMPANY AND AS PER THE LEGAL POSITION THE ACKNOWLEDGMENT OF THE LIABILITY IN FAVOUR OF THE CREDITORS IN I TS BALANCE SHEET EXTENDS THE PERIOD OF LIMITATION FOR THE PURPOSE OF SECTION 18 OF THE LIMITATION 5 ITA NO. 4423 / MUM /201 2 ACT. IT IS THE ASSESSEE'S CLAIM THAT THE DEBTS ARE SUBSISTING AND IT CONTINUES TO BE LIABLE TO PAY THE CREDITORS. IT IS NOT OPEN TO THE INCOME TAX A UTHORITIES TO DRAW THE CONCLUSION THAT THE CREDITORS HAVE REMITTED THE LIABILITY OR THAT THE LIABILITY HAS OTHERWISE CEASED WITHOUT EVIDENCE OR MATERIAL WHEN THE ASSESSEE ACKNOWLEDGES A LIABILITY IN THE BALANCE SHEET AND EXPLANATION - L IS NOT APPLICABLE. IN THE PRESE NT CASE THE LIABILITY TO THE CREDITORS CONTINUES TO BE SHOWN IN THE ASSESSEE'S BOOKS OF ACCOUNTS AND THE ACCOUNTS OF THE CREDITORS HAVE NOT BEEN WRITTEN BACK. THIS FINDING OF FACT BY THE TRIBUNAL IS NOT UNDER CHALLENGE. ' ' IN CIT V . S U GAUL I SUG A R WORKS ( P ) LTD . (1 999) 236 ITR 518 THE SUP R EME C OURT DIS A PPROVED THE REA S ON ING O F T H E BO M B A Y H I G H C OU RT I N C IT V. BENNETT COL E M A N & CO. L T D. (1 9 9 3 ) 2 0 1 I TR 1 0 21 . IN T H I S JU DG MENT THE B OMB AY HIGH C O UR T HAD D I S T INGU I SHED IT S EARL I E R JUDGMEN T I N K O H I N OOR MILL S CO . L TD . V . C I T (196 3 ) 49 ITR 5 78 B Y HO LDI NG TH A T CE S SAT I ON OF LI AB I LIT Y C AN TA K E PLACE EV E N A S A R E S U L T O F AN UN IL A T ERA L AC T AND WHERE A DEB T HA S BE C OM E B AR R E D B Y L IMIT AT IO N B Y O P E RAT I O N OF L A W THE UN I LATERAL AC T OF T H E ASSESSEE T RANS FERRING THE SAME T O H I S P RO F I T AND LO S S A C COUNT AND THER E BY TR EA TING A S HIS IN C OM E W OU L D ATT R A C T THE PRO V I S ION S OF SECTION 4 1 ( 1 ) OF T H E A C T . THE B O MBAY HIGH C OU RT HAD A LSO O BSER V ED THAT THE R E W A S A CE S SATION OF T H E L I A BILITY D UE TO T HE E X PIRY O F PE R IOD O F LI M IT A T I O N TO E NFORCE T HE SA ME . DISAPPRO VI NG T HE L I NE OF REA S ONING OF THE BO M BA Y H I GH COUR T I N CIT V . B EN N E T T CO L E MA N & C O . LTD. (SUPRA) TH E SUPR EME C O URT HE L D AS UND E R : - ' WE A RE UN A B LE T O AC C EPT THE REASO N I N G OF T HE BO MBA Y H I GH COU RT IN T H AT CASE . JUS T BE C AU SE AN AS S ESSEE M A KES A N E N TRY IN HIS BO OK S OF A C COUNT UNILATERALL Y HE CANNOT GET R I D O F HIS L I ABILIT Y . T HE QU ESTI ON WHET HER T H E LIABI L ITY IS AC TU A LL Y BARRED B Y LIMITAT I ON IS N O T A MATT E R W H ICH C AN B E D EC ID ED BY CO N S IDE RI N G T H E A SS E SSEE 'S C ASE ALON E BUT IT I S A MATTER W HICH HA S TO B E D ECIDED ONL Y I F TH E C R EDITOR IS B EFOR E TH E CO N C ERN E D A UTHORIT Y . IN T H E A B SE N CE OF T HE CREDITOR I T I S NOT PO SSIBLE F OR TH E A UTHO RI T Y TO COME TO A CO N CLUSIO N THAT T H E DE B T IS BARRED AND HAS BE C OME U N E NFO R CE ABL E . THERE MA Y BE CIRCUM S T A N C E S WH I CH MA Y ENABLE THE CRED I TOR TO C OM E W IT H A P ROC E E D I NG FO R ENFORCE M EN T OF THE D E B T E VEN A F TER THE E X P IRY OF T HE NORMAL PERIOD OF LIMITA T I ON AS PR OVID ED I N THE LIM I TAT ION A CT . ' ' I T MA Y BE OBSER VED T HAT IN THE PRESENT C A SE AS NOTED EARLIE R THE ASSESSIN G O FF I C E R HA S N O T B R OU G H T ON RECORD AN Y EV I DENCE OR MATERIA L INCLUD I NG A N Y STATEMENT F R OM THE C R EDITOR S T HA T THE D E B TS HAD BEEN E X T I NGU I SHED AND THE LIAB ILITY O F THE ASSESSEE T O PAY THEM H A S C E A SE D D E S P I T E THE EXT ENS I O N OF TH E PER I OD OF L IMI TAT I ON B Y AC K N OWL E DGM ENT MA D E I N T H E A SS ES S EE ' S B ALA N CE SHEET . 6 ITA NO. 4423 / MUM /201 2 SE C T I O N 4 1 (1) ( A ) C A NNOT BE I N VOKE D O N THESE FA C T S' . 2.8 FROM THE PLA I N READ IN G O F SEC TI O N 4 1 IT I S C L EA R TH A T F O LL O WI NG COND ITI ONS SHOULD BE FULF I LLED. D) IT SHOULD HA VE C LA I M ED TH E ALLEGED AMOU N T AS D E D UC T ION IN RESPECT OF LO S S E X PEN DIT U R E OR T R AD IN G L I AB I L ITY I N THE A S SESSM E N T F O R AN Y Y EAR ; AND E) I T SHOUL D HA VE R E C EI V ED AN Y AMOUNT I N R ES P EC T OF SU C H LO S S O R EX PENDI T U RE OR S OM E BEN E FIT IN R ESPE C T OF S U C H T RAD I N G L IABI L ITY B Y W A Y O F REMIS S I O N OR CESSATION THEREOF ; AND F) THAT THE L I ABIL ITY H AS C E ASE D TO BE ' ' P AYABLE 2.9 THE FACTS OF THE PRESENT CASE ARE THAT THE ' CRED I TOR HAS C L AIMED THE AMOUNT IN ITS BALANCE SHEET AND THE CONFIRMATION WAS . A L SO FILED ' A L ONG WITH THE BALANCE SHEET BEFORE THE A.O. THE LIABILITY HAS ALSO SHOWN AS OUTSTAND I NG IN THE BALANCE SHEET OF THE ASSESSEE AND NO PAR T Y HAS W R I TTEN OF F O F IN THE BOOKS OF ACCOUNTS. NO DOUBT THE L I ABI LI TIES OUTSTAND I NG S I NCE A . Y. 2001 - 02 AND THE ASSESSEE'S SON I S A D I RECTOR IN THE COMPANY BUT THESE FAC TS CA N NOT OVER R U L E TH E COND I TIONS LA I D DOWN IN THE PROVISIONS OF SECTION 41 . MOREOVER TH E APPE L LANT HAS A L SO SUBM I TTED THA T T HE LIAB I L I TY HAS BEEN REPAID DUR I NG THE CU RRE N T Y E AR . TH E RE F OR E THE SE THRE E COND I TI ONS THAT THE ASSESSEE HAS NO T C LAIMED TH I S A M OU N T AS D E DU CTION S EC O NDLY THE LI ABILITY H AS NOT CEA SED TO EXI S T AND THIRDLY IT IS SHOWN AS PAYAB L E & RECEIVAB L E RESPECTIVELY BY BOTH THE PA RTIES. THU S N O N E OF THE CONDITION IS FULFILL E D BY THE ASSESSEE . TH E F A CTS OF THE PRESENT CASE ARE SQUARELY C OVERED B Y T HE DECIS I ON OF THE HON' BLE SUP R EM E COURT AND T H E HON ' BLE DE LHI H IGH COU RT ( S UPRA) THEREFORE IT I S CONCLUD ED T HAT S INCE THE LI AB ILITY I S O UT S T AND I NG IN THE BAL A NCE SHEET O F BOTH THE PARTIES AN D THERE I S N O I NFORMATION WITH THE A.O. THAT AN Y PA RTY HAS WR ITTEN IT OFF IN THE BOOKS OF ACCOUN T S . THER EF O RE M E R E L Y ON THE BA S IS OF THAT THE LIABILITIE S O UTSTANDING FOR THE LAST 1 0 YE A R S AND TH E ASSESSEE ' S SO N I S A DIRECTOR IN THE COM PA N Y CANN O T BE A REASON FOR INV O KIN G THE PROVISION OF SECTION 41 ( 1) O F T HE LT. A CT. S I NC E BOTH TH E PART I ES ARE REFL ECTING T HE E NTRY IN THE BA L ANCE S HE E T AN D MOREOVER HA S BEEN R EPA I D IN THE CU RR E N T YEA R TH EREFORE THE ADD IT ION M ADE BY H O LDING IT A S LI AB ILITY CE ASED TO E X IS T I S NO T SUSTA I NABLE HENCE DELETED. GRO U ND O F AP PEAL I S A L L OW E D . 7 . ON A CAREFUL READING OF THE LD. CIT(A)S ORDER WE FIND TH A T NEITHER OF THE PARTIES HAVE BEEN REVERSED THE ENTRIES IN THEIR BOOKS OF ACCOUNT. NONE OF THE PARTIES HAVE WRIT T E N OFF THE AMOUNTS IN THE BOOKS OF ACCOUNT AND IT IS ALSO THE FACT THAT THE ASSESSEE HAS NOT CLAIMED THIS AMOUNT AS DEDUCTION THE LIABILITY H AS NOT CEASE D TO EXIST AND THIS 7 ITA NO. 4423 / MUM /201 2 AMOUNT HAS BEEN SHOWN AS PAYABLE AND RECEIVABLE BY BOTH THE PARTIES. IT IS THE FINDING OF THE LD. CIT(A) THAT NONE OF THE CONDITIONS FOR INVOKING THE PROVISIONS OF SECTION 41(1) HAVE BEEN ESTABLISHED BY THE ASSESSING OFFICER . IT IS THE FINDING OF THE LD. CIT(A) THAT SIMPLY BECAUSE THE LIABILITIES ARE OUTSTANDING FOR MORE THAN 10 YEA RS AND THE ASSESSEES SON IS ONE OF THE DIRECTORS OF THE RECIPIENT COMPANY THIS CA N NOT BE A REASON FOR INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT. WE ENDORSE THIS VIEW OF THE LD. CIT(A). FURTHER WE FIND THAT THE ASSESSEE ALSO SUBMITTED THAT T HE LIABILITY HAS BEEN DISCHARGED DURING THE ACCOUNTING YEAR 2008 - 09 . NONE OF THE ABOVE OBSERVATIONS HAVE BEEN REVERTED BY THE REVENUE. IN THESE CIRCUMSTANCES WE DO NOT FIND ANY VALID REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) WHICH IS HEREBY CONFIRMED AND WE DISMISS THE GROUNDS OF APPEAL OF THE REVENUE . 8 . IN THE RESULT APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH OCTOBER 2016 SD/ - SD/ - ( RAJENDRA ) ( C.N. PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19 TH OCT. 201 6 . VR/ - COPY TO: 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R . 6. GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T. MUMBAI .