Income Tax Appellate Tribunal - Kolkata
Amusar Services & Suppliers Pvt. Ltd., ... vs Department Of Income Tax on 30 January, 2015
I . T. A . N o. 6 09 / Kol./ 2 01 2
As s e ssm en t Ye ar : 20 07 - 20 0 8
Page 1 of 4
IN THE INCOME TAX APPELLATE TRIBUNAL,
KOLKATA 'A' BENCH, KOLKATA
Before Shri N.K. Saini (Accountant M ember),
and Shri Ge orge M atha n (Judicia l Member)
I.T .A. No . 609 /Ko l./ 2 012
Assess ment year : 2007 -2 00 8
Income Ta x Offic er,........ .................................................Ap p ella n t
Wa rd -8(1), Kollka ta,
A a ya ka r Bha wa n,
P-7, C howring hee squa re,
5 t h Floor, Room N o. 12A,
Kol ka ta -700 069
-Vs.-
M/s. A musa r Servic es & Supp lie rs Pvt. Ltd.,.................Re sp ond ent
1, C ock Burn La ne ,
4 t h Floor,
Kol ka ta -700 016
[PA N : AA DCA 9277 D]
Appeara nces by :
Shri R aj endr a Pr as aad, JCIT, f or the Departm ent
Shri A.K. Tibrewal, F CA, for th e assessee
Dat e of concluding t he hearin g : J anuary 28, 2 015
Dat e of pr onouncing th e order : J anuary 30, 2 015
O R D E R
Per Ge orge M athan:
This is an appeal filed by the Revenue again st the o rder p assed by the ld. Commi ssion er of Income Tax ( Appeals )-VI II, Kolk ata in Appeal No. 353/CIT(A)-VII I/Kol/09-10 dated 17.01.2012 fo r the asse ss ment yea r 2007-08.
2. Sh ri Raje ndra Prasad, JCIT, Sr. D.R., represent ed on behalf of the Revenue and Shri A.K. Tibrewal, F.C.A., represented on behalf of the as se sse e.
3. In the R evenue's appeal, the R evenu e has rai sed the fo llowing ground:-
I . T. A . N o. 6 09 / Kol./ 2 01 2 As s e ssm en t Ye ar : 20 07 - 20 0 8 Page 2 of 4 "Whether on th e facts and in the cir cumstances of th e case, the ld. CIT(Appeals)-VIII, Kolka ta was j ustified in la w in deleting th e addition made on account of cessation of the liability sho wn in parts by the a ss essee and not bringing the whole amo unt in to the n et o f taxa tion under s ectio n 41(1) of the I.T. Act , 196 1".
4. At the time of hea rin g, it was submitt ed by the ld. JCIT, Sr. D.R. that the only issue in the Rev enu e's appeal was ag ain st th e action of the ld. CIT(App eals) in del etin g th e addition made by the A s sessin g Office r rep resentin g the cessation of the li ability in respect of one of the as se sse e's credito rs M/s. Rudgo rmach, Russi a. It was the submis sion that the assessee had received an amount of R s.33,3 7,011/- from M/ s. Rudgo rmach, Rus sia on 01. 04.2006. It was the submi ssion that o ut of the said amount the asses see had clai med an exp en ditu re of R s.6 ,26,128/- under th e he ad "servicin g and su pplying spare p arts of min ing machin ery to Coal Indi a Li mit ed", as p e r the a greement d at ed 02.04. 2011, which was am ended by a lett er d ated 18.12.2006. It wa s the submi ssio n that acco rdingly the balanc e of R s.27,10,883/- rema ined out standin g. A s the amount o f R s.33,37,011 /- which was treat ed as advan ce by the asse ss ee, had been app ro p riat ed to the e xten t of Rs.6, 26,128/- towards th e serv icin g and supplying sp are p arts in resp ect of Coal Indi a Li mited, the amount o f Rs. 33,37,011/- was liable to be treated as adv ance inco me of the assessee. It wa s the sub mi ssion t hat the ld. CIT(Appeals) wrongly deleted the add ition m ade by the Asses sin g Offi ce r.
5. In rep ly , ld . A.R. submitted that th e amo unt of Rs.3 3,37,011/- was not receiv ed by the assessee on 01.04.20 06 but was rec eived a s a co nsequence of an agreement en tered i nto between the ass es see and M/ s. Rudgo rmach, Russi a d ated 02.04.20 01. As pe r the s aid agreement, the as se sse e wa s to rend er repai r o f b roken parts, repair o f equipmen t unde r field cond itions, supervision of equipment operation u nder the observation by Coal India Li mit ed speci alis ts, timely and prop e r as si stan ce to Co al Indi a Li mited sp ecialists and other requ iremen ts.
I . T. A . N o. 6 09 / Kol./ 2 01 2 As s e ssm en t Ye ar : 20 07 - 20 0 8 Page 3 of 4 Consequent to this, the Rus sian Co mpany had paid the as se sse e an adv ance of 2,50,000 US Dollars. It wa s t he submi ssion that th e amoun t of Rs. 33,37,011/- was the o p enin g bal an ce as on 01.04.2006. It was th e submission that durin g th e year t he ass essee h ad incu rred th e expendi tures in resp ect of th e agree ment and in co mplian ce of the sa me had ad ju sted th e a mount of R s.6,26,128 /- f rom th e s aid advan ce as p er the a mendment to th e agreement dat ed 0 2.04.2001 made vide lett er dated 18.12.2006. It was the sub mi ssion th at the balanc e remained as advanc ed and was sho wn as advance in the acc ounts of the asses se e. It was the submission th at the balance a mount of Rs.27,10, 883/- did n ot cease and co nsequently the provision s of section 41(1 ) did not apply . Ld. A.R. drew our att ention to the deci sion o f the Hon 'ble Mad ras Hi gh Court in the case of Tamiln adu W arehou sin g Co rpo rat ion repo rted in 292 ITR 310 ( Mad .) to submit that as long as the liability is a ppearin g in the books of accounts of th e ass ess ee, the same cannot be treat ed as an income u nder section 41(1) o f the Income Tax Act, 196 1. He vehe mently supported the o rde r of ld. CIT(Appeal s).
6. We have conside red the rival submission s. A perus al of the as se ssm ent o rde r clearly shows th at th e assessee has sho wn the li ability of Rs. 27,10,883/- as a liability in its a cco unts. The amount of Rs. 33,37,011/- clea rly is the balance as on 01.04.2006. This is not an amount rec eived by the assessee durin g the relevant ass es sment ye ar. A peru sal of the modifi catio n to the agreement dat ed 02.0 4.2001 vide letter dated 18.12 .2006 clearly shows th at M /s. Rudgo rmach, Russi a has catego rically directed the ass essee to adjust th e n eces sary expen ses requi red for the marketin g, pro motional and liasioning work in cludin g co mmi s sion on behalf o f M/s. Rudgo rmach again st th e outstandin g lying with the a ccount. This clearly sh ows th a t there is no cessation of liability. Further a pe ru sal of the orde r of ld. CIT(Appeal s) clearly sh ows that the ld. CIT(App eals) ha s deleted the addition by following the d eci sion of the Hon'ble Mad ras Hi gh Cou rt in th e case of Tamilnadu W arehou sin g I . T. A . N o. 6 09 / Kol./ 2 01 2 As s e ssm en t Ye ar : 20 07 - 20 0 8 Page 4 of 4 Corporation ref erred to sup ra a s also the dec ision of the Hon'ble Apex Court in the cas e of Sug auli Su ga r Work s (P) Li mited reported in 2 36 ITR 518 (SC), wherei n it has been cat ego ric ally held that "even unilateral writin g o ff of the li ability in the b ooks of account do es not amount to cess ation or remi s sion of liability to bring into the net of t axation unde r sect ion 41(1) of the Income T ax Act, 1961". In the present c ase, the amount h as an y way not been writt en off. It rema ins as a liability in the book s of the as se ss ee. In these circum st ances, we are of the v iew that the finding of the ld. CIT(Appe als) is on ri ght fo otin g a nd do es not call fo r any inte rf erenc e.
7. In the result, the appeal of the R evenue stand s dismis sed.
Orde r p ronounced in th e open Co urt on 30 t h Jan uary , 2015.
Sd/- Sd/-
N.K. Saini George Mathan
(Accountant Me mber) (Judici al Me mber)
Kolkata, th e 30 t h day of January, 2015
Co pies to : (1) Income Ta x Office r,
Wa rd -8(1), Kollka ta,
A a ya ka r Bha wa n,
P-7, C howring hee squa re,
5 t h Floor, Room N o. 12A,
Kol ka ta -700 069
(2) M/s. A musa r Servic es & Supp lie rs Pvt. Ltd.,
1, C ock Burn La ne ,
4 t h Floor,
Kol ka ta -700 016
(3) Comm iss ioner of Incom e Tax (Appeal s )
(4) Com mis sioner of Incom e Tax
(5) The Depar tmental R epr es entative
(6) Guard Fil e
By order
Assistant Registrar
Income Tax App ellate Tribunal
Kolkata Ben ch es, Kolkata
Laha/Sr. P.S.