M/s Flight Raja Travels Pvt Ltd , Bangalore V. Assistant Commissioner of Income Tax Circle-3(1)(1), Bangalore

ITA 135/BANG/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3496 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-10-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 12-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRA
• Assessee Lawyers: SHEETHAL
• Keywords: Capital asset; Question of law; Wholly owned subsidiary; Bad and doubtful debts; Commercial expediency; Revenue expenditure; Capital expenditure; Liquidation
• Section: 244A; 37(1); 13; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.135/BANG/2018 ASSESSMENT YEAR : 2014-15 M/S FLIGHT RAJA TRAVELS PVT. LTD., BLOCK B, LEVEL 04, MAGNOLIA OUTER RING ROAD, MANYATA EMBASSY BUSINESS PARK, NAGAWARA, BENGALURU-560 045. PAN AABCF 0520 E VS. THE ASST. COMMISSIONER OF INCOME- TAX, CIRCLE-3(1)(1), BENGALURU. APPELANT RESPONDENT APPELLANT BY : SMT. SHEETHAL, ADVOCATE RESPONDENT BY : SHRI PRIYADARSHI MISHRA, ADDL.CIT(DR) DATE OF HEARING : 04.10.2021 DATE OF PRONOUNCEMENT : 11.10.2021 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-3, DATED 27.11.2017 FOR THE ASSESSMENT YEAR 2014-2015. 2. THE ASSESSEE RAISED FOLLOWING GROUNDS :- ITA NO.135/BANG/2018 PAGE 2 OF 13 1. THE LEARNED CIT (A) ERRED IN PASSING THE ORDER IN THE MANNER HE DID 2. THE LEARNED CIT(A) PASSED THE ORDER WITHOUT GIVI NG PROPER OPPORTUNITY TO THE APPELLANT TO SUBMIT THE DETAILS. 3. THE LEARNED CIT (A) OUGHT TO HAVE ALLOWED THE ADVANCES WRITTEN OFF TO THE EXTENT OF RS. 5,54,09,33 1 AS BAD DEBTS OR IN ALTERNATIVE BUSINESS LOSS, SINCE THE SAME HAD ARISEN DURING THE COURSE OF BUSINESS INCIDENTAL TO BUSINESS OF THE APPELLANT. 4. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDI TION OF RS. 1,28,30 1 U/S 41 OF THE ACT. 5. THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED TH AT MERELY BECAUSE TRADING LIABILITY IS BEING KNOWN BY APPELLANT IN HIS BOOK OF ACCOUNTS FOR YEARS AND FURT HER MERELY BECAUSE ASSESSEE IS UNABLE TO PROVIDE CONFIRMATION, SECTION 41 IS NOT ATTRACTED AS LONG A S THE LIABILITY IS NOT WRITTEN OFF IN BOOKS OF ASSESSEE O R THERE IS ANY BENEFIT DERIVED BY ASSESSEE BY CESSATION OF LIABILITY 6. THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED TH E CASE LAW RELIED BY THE APPELLANT AND OUGHT TO HAVE DELETED THE SAME. 7. THE CIT (A) ERRED IN CONFIRMING LEVYING OF THE I NTEREST U/S 244A OF THE ACT. 8. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URG ED AT TIME OF HEARING, THE APPELLANT PRAYS THAT THE AP PEAL MAY BE ALLOWED. 3. THE FIRST GROUND FOR OUR CONSIDERATION IS WITH R EGARD TO ALLOWABILITY OF SUM OF RS.5 CRORES ADVANCED TO B LUE OCEAN CRUISES LINES PVT. LTD., FOR THE PURPOSE OF G ETTING 30% SHAREHOLDING IN A JOINT VENTURE TO BE SET UP BE TWEEN ITA NO.135/BANG/2018 PAGE 3 OF 13 ASSESSEE-COMPANY AND MR.ONEIL RAINA FOR INVESTING I NTO M/S BLUE OCEAN CRUSIES LINES PVT. LTD. 4. THE CONTENTION OF THE LEARNED AR IS THAT THE SAI D AMOUNT HAS BEEN INVESTED IN M/S BLUE OCEAN CRUSIES LINES PVT. LTD. FOR ALLOTMENT OF 30% SHARES IN THE COMPANY VIDE MOU DATED 27/8/2010 ENTERED WITH TRIPARTE AGREEMENT BETWEEN ONEIL RAINA KHOSA AND M /S BLUE OCEAN CRUSIES LINES PVT. LTD. AS PER THIS AGREEMENT, ASSESSEE HAS TO INVEST RS.5 CRORES IN T HAT COMPANY I.E M/S BLUE OCEAN CRUISES LINES PVT. LTD. FOR THE PURPOSE OF ALLOTMENT OF 4,286 EQUITY SHARES AND INVESTED THE SAID AMOUNT. THE CRUISE OWNED BY M/S BLUE OCEAN CRUSIES LINES PVT. LTD. MET WITH AN ACCIDENT AND CONSEQUENTLY THE COMPANY WAS SHUTDOWN. NO SHARES WE RE ALLOWED TO THE ASSESSEE COMPANY. HENCE THE SAID AM OUNT BECAME IRRECOVERABLE AND WRITTEN OFF IN THE BOOKS O F ACCOUNT OF THE ASSESSEE, THEREFORE, THE SAME HAS TO BE ALLOWED AS BUSINESS LOSS INCURRED BY THE ASSESSE. 5. THE LD.DR SUBMITTED THAT IT IS A CAPITAL LOSS ON ACCOUNT OF LOSS OF INVESTMENT AND CANNOT BE ALLOW ED AS BUSINESS LOSS. HE SUPPORTED THE ORDER OF CIT(A). ITA NO.135/BANG/2018 PAGE 4 OF 13 6. THE LD.AR RELIED ON THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN ITA NO.184 OF 2013 DATED 9/9/2020 IN THE CASE OF M/S ACE DESIGNERS LTD., WHE REIN HELD THAT THE BOMBAY HIGH COURT DEALT WITH THE ISSUE VIZ., WH ERE AN ASSESSEE MADE AN INVESTMENT IN ITS 1000/0 SUBSIDIAR Y FOR BUSINESS PURPOSE, THE !OSS ON SALE OF INVESTMENT WO UID BE TREATED AS BUSINESS LOSS. THE AFORESAID ISSUE WAS A NSWERED IN THE AFFIRMATIVE BY THE BOMBAY HIGH COURT IN COMMISSIONER OF INCOME-TAX VS. COLGATE PALM OLIVE (INDIA) LTD. SUPRA AND IT WAS HELD THAT INVES TMENT WAS MADE FOR COMMERCIAL EXPEDIENCY. THE AFORESAID DECISION HAS BEEN UPHELD BY THE SUPREME COURT AS HA S BEEN NOTED BY INCOME TAX APPELLATE TRIBUNAL, NEW DELHI B ENCH IN ITS ORDER DATED 31.12.2018 IN COSMOS INDUSTRIES LTD VS. DCIT. IN PATNAIK & CO. LTD. SUPRA, IT WAS HELD THAT THE ASSESSEE DID NOT HOLD ON THE INVESTMENT THE LOAN IN DEFINITELY AND THERE WAS NO ENDURING ADVANTAGE AND THE INVESTM ENT DID NOT BRING IN AN ASSET OF A CAPITAL IN NATURE AN D THE LOSS SUFFERED BY THE ASSESSEE WAS A REVENUE LOSS AND NOT A CAPITAL LOSS. IN INVES1A INDUSTRIAL COPORATION LTD. , SUPRA, THE DIVISION BENCH OF THE HIGH COURT DEALT W ITH A QUESTION WHETHER THE FINANCES MADE BY THE ASSESSEE TO MANAGE THE COMPANY WERE PART OF OR INCIDENTAL TO CA RRYING ON A BUSINESS BY THE ASSESSEE A AND SINCE, THE MANA GED COMPANY WENT INTO LIQUIDATION THE ADVANCES BECAME IRRECOVERABLE, THE LOSS SUSTAINED BY THE ASSESSEE S HALL BE REGARDED AS TRADING LOSS. ITA NO.135/BANG/2018 PAGE 5 OF 13 7. IN THE BACKDROP OF AFORESAID WELL SETTLED LEGAL POSITION, THE FACTS OF THE CASE IN HAND MAY BE ADVERTED TO. F ROM THE PERUSAL OF THE NOTE ANNEXED TO THE INCOME FILED BEF ORE THE ASSESSING OFFICER, IT IS EVIDENT THAT ASSESSEE HAD SET UP AN ESTABLISHMENT IN USA DURING FINANCIAL YEAR 1992-93 FOR THE EXCLUSIVE PURPOSE OF MARKETING ASSESSEE'S PRODUCTS AND FOR PROMOTING ITS BUSINESS IN US AND LATIN AMERICA. IT HAS FURTHER BEEN STATED IN THE NOTE THAT LOOKING TO THE STRINGENT NORMS OF PRODUCT LIABILITY IN US MARKET, THE ASSESS EE DECIDED TO HAVE A SEPARATE WHOLLY OWNED ENTITY IN T HE US HAVING LIMITED LIABILITY. THE APPROVAL FOR AFORESAI D PURPOSE WAS OBTAINED FROM THE RESERVE BANK OF INDIA. THE AS SESSEE THEREFORE, INVESTED FUNDS IN EQUITY FOR MEETING THE REVENUE EXPENSES OF WHOLLY OWNED SUBSIDIARY COMPANY'S BALAN CE SHEET. HOWEVER, WOS COULD NOT PERFORM UPTO COMPANY' S EXPECTATIONS AND THEREFORE, IT WAS DECIDED TO WIND UP WOS OPERATIONS IN USA. WHILE GRANTING APPROVAL FOR CLOS URE OF WOS, RBI PERMITTED THE COMPANY TO WRITE OFF THE WHO LE OF INVESTMENT MADE IN WOS AND UNREALIZED EXPORT RECEIV ABLES. THE ASSESSEE THEREFORE, MADE A CLAIM TO WRITE OFF T HE LOSS OF RS.3,41,23,200/- AS REVENUE EXPENSES ALLOWABLE UNDE R THE PROVISIONS OF THE ACT. 8. THUS, FROM PERUSAL OF THE AFORESAID FACTS, IT IS EVIDENT THAT THE ISSUE INVOLVED IN THIS APPEAL IS COVERED BY DEC ISION OF BOMBAY HIGH COURT IN COLGATE PALM OLIVE (INDIA) LTD . SUPRA, WHICH HAS BEEN UPHELD BY THE SUPREME COURT. THE RAT IO OF AFORESAID DECISION IS WHERE THE ASSESSEE MAKES INVE STMENT IN ITS 100% SUBSIDIARY FOR BUSINESS PURPOSE, LOSS O R SALE OF ITA NO.135/BANG/2018 PAGE 6 OF 13 INVESTMENT HAS TO BE TREATED AS BUSINESS LOSS OF TH E ASSESSEE. IN THE INSTANT CASE, THE ASSESSEE MADE IN VESTMENT IN THE SHARES OF WOS FOR THE BUSINESS PURPOSE I.E., FOR THE ENHANCEMENT OF BUSINESS ACTIVITY OF THE ASSESSEE IN GLOBAL MARKET WHICH PRIMARILY RELATED TO BUSINESS OPERATIO N OF THE ASSESSEE. THE WOS SUFFERED LOSSES AND THEREFORE THE ASSESSEE WROTE OFF THE ASSESSMENT OF RS.3,41,23200/ - AS BUSINESS LOSS. THE INVESTMENT WAS MADE FOR THE PURP OSE OF EXTENSION OF BUSINESS ACTIVITY AND NOT WITH A VIEW TO CREATING CAPITAL ASSET IN THE FORM OF HOLDING SHARE S. IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE NEVER ACQUIRED ANY CAPITAL ASSET OR EXPENDITURE OF ENDURING BENEFITS T O WOS AND THERE IS NO RELINQUISHMENT OR TRANSFER OF CAPITAL A SSET TO ANY THIRD PARTY. IN VIEW OF PRECEDING ANALYSIS, THE FIRST SUBSTANTIA L QUESTION OF LAW IS ANSWERED IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE. IT IS NOT NECESSARY FOR US TO ANSWER THE REMAINING SUBSTANTIAL QUESTION OF LAW IN VIEW OF OUR ANSWER T O THE FIRST SUBSTANTIAL QUESTION OF LAW. IN THE RESULT, THE ORD ER OF THE TRIBUNAL DATED 14.12.2012 TO THE EXTENT OF THE FIND INGS CONTAINED AGAINST THE ASSESSEE IS QUASHED. ACCORDINGLY, THE APPEAL IS ALLOWED. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD AND HAVE ALSO GONE THROUGH THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT (SUPRA ). IN THAT CASE THE AMOUNT INVESTED BY ACE INTERNATIONAL INC., ITA NO.135/BANG/2018 PAGE 7 OF 13 WAS ALLOWED AS A BUSINESS LOSS ON ACCOUNT THAT AM OUNT WAS INVESTED FOR THE ENHANCEMENT OF BUSINESS ACTIVI TY OF THE ASSESEE IN GLOBAL MARKET WHICH PRIMARILY RELATE D TO BUSINESS EXIGENCIES OF THE ASSESSEE AND IT WAS WHOL LY OWNED SUBSIDIARY OF ASSESSEE COMPANY, WHICH HAD SUFFERED LOSS, THEREFORE, THE ASSESSEE TREATED TH E AMOUNT AS BUSINESS LOSS. THE INVESTMENT WAS MADE FOR THE PURPOSE OF EXPANSION OF BUSINESS ACTIVITY OF THE A SSESSEE AND NOT WITH A VIEW TO CREATING CAPITAL ASSET IN THE FORM OF HOLDING SHARES. HOWEVER, IN THE PRESENT CASE, THE FACTS SHOWS THAT ASSESSEE MADE INVESTMENT OF RS.5 CRORE BY THE SHARES OF M/S BLUE OCEAN CRUISES LINES PVT. LTD . AND WRITTEN OFF THE CLAIM AS LOSS. THE PRESENT FACTS O F THE ASSESSEES CASE SHOWS THAT THE INVESTMENT WAS MADE NOT FOR THE PURPOSE OF EXPANSION OF BUSINESS ACTIVITY BUT IT WAS MADE WITH A VIEW TO CREATING CAPITAL ASSET IN T HE FORM OF HOLDING SHARES. BEING SO, THE JUDGMENT RELIED ON BY THE LD.COUNSEL OF THE ASSESSEE SUPPORTED THE CASE OF RE VENUE RATHER THAN ASSESSEES CASE. 8. WE ALSO FIND THAT IN THE CASE OF CIT(A) VS. UNIT ED BREWERIES LTD., 321 ITR 546 WHEREIN, HONBLE KARNAT KA JUDICIAL HIGH COURT HELD AS FOLLOWS:- EVEN ON THE ACCEPTED LEGAL PRINCIPLES, A 'DEBT' IS AN EXPRESSION WELL-KNOWN IN LEGAL PARLANCE AND IS AN A MOUNT ITA NO.135/BANG/2018 PAGE 8 OF 13 WHICH IS A LEGAL OBLIGATION WHICH IF NOT DISCHARGED WILL GIVE RISE TO A CLAIM IN FAVOUR OF THE CREDITOR. AN AMOUN T WHICH IS SAID TO BE SIMPLY ADVANCED FOR HELPING A BUSINESS ASSOCIATE DEFINITELY CANNOT CONSTITUTE A DEBT WHEN THE ASSESSEE HAD NOT PLACED ANY MATERIAL TO INDICATE TH AT THE BUSINESS ASSOCIATE OR ANY ASSOCIATE OF THE SUBSIDIA RY OF THE ASSESSEE HAD A LEGAL OBLIGATION FOR REPAYMENT O F THE AMOUNT. THE AMOUNT ADVANCED IS MORE TOWARDS THE ISS UE OF SHARES IN FUTURE IF A COMPANY IS TO BE BROUGHT I NTO EXISTENCE AND IN THE HOPE OF GETTING SHARES ALLOTTE D IN THE COMPANY. AN EXPENDITURE INCURRED FOR SECURING SHARE S PER SE IS A 'CAPITAL EXPENDITURE' AND NEVER 'REVENUE EXPENDITURE' AND THEREFORE THE AMOUNT NEVER QUALIFI ES FOR DEDUCTION EITHER UNDER S. 36 OR S. 37. AN EXPENDITU RE IN THE NATURE OF 'CAPITAL EXPENDITURE' STRAIGHTAWAY GOES O UT OF THE PURVIEW OF S. 37 UNLESS THE AMOUNT FULLY QUALIFIES IN TERMS OF THE OTHER STATUTORY PROVISIONS AND IN THE INSTAN T CASE, IN TERMS OF S. 36 (1)(VII) THERE IS NO QUESTION OF 'WR ITTEN OF IRRECOVERABLE DEBTS' WHICH CLAIM INEVITABLY FAILS A ND THE MATTER DOES NOT WARRANT INTERFERENCE EVEN FOR A REM AND FOR RECORDING A FINDING ON NONEXISTENT MATERIAL AND THE REFORE THIS CLAIM IS REJECTED. 9. BEING SO, FACT OF THE PRESENT CASE IS AS SIMILAR TO ONE CONSIDERED BY THE JURISDICTIONAL HIGH COURT AS ABOV E. ACCORDINGLY, WE ARE OF THE OPINION THAT THE CLAIM O F ASSESSEE CANNOT BE HELD AS BUSINESS LOSS RATHER IT IS A CAPITAL LOSS. ACCORDINGLY, THIS GROUND OF THE ASS ESSE IS DISMISSED. 10. THE ASSESSE ALSO RAISED ADDITIONAL GROUND WITH THE PETITION FOR THE ADMISSION OF THE SAME, WHICH READ AS FOLLOWS:- ITA NO.135/BANG/2018 PAGE 9 OF 13 1. THE LEARNED A.O. HAS ERRED IN LAW BY DISALLOWI NG THE ASSESSE BUSINESS LOSS U/S.37(1) TO THE APPELLANT. 2. THE LEARNED A.O. FAILED TO APPRECIATE THAT THE A DVANCES MADE WERE IN THE NATURE OF TRADE AND NOT FOR EARNIN G DIVIDEND, AND SINCE THE SAME WAS DONE IN THE COURSE OF BUSINESS, IT WOULD RESULT IN A BUSINESS LOSS AND TH E SAME WOULD BE ALLOWABLE AS A BUSINESS LOSS U/S.37(1) OF THE ACT. 3. THE LEARNED A.O. OUGHT TO HAVE APPRECIATED THAT SECTION 37(1) OF THE ACT GOVERNS THE CLAIM OF EXPENDITURE I NCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND HENCE IT IS SUBMITTED THAT THE LOSS ARISING FROM EXPENDITURE BEING AN EXPENDITURE MADE BY THE APPELL ANT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS IS ENTITLED FOR WRITE OFF U/S.37(1) OF THE ACT. 4. WITHOUT PREJUDICE, THE ADDITION MADE IS BAD IN L AW AND OUGHT TO BE DELETED IN TOTO. 11. WE HAVE CAREFULLY GONE THROUGH THE ADDITIONAL GROUND RAISED BY THE ASSESSEE AND ALSO PETITION FIL ED ALONG WITH THIS ADDITIONAL GROUND. IN OUR OPINION, THERE IS A GOOD AND SUFFICIENT REASON IN NOT RAISING THIS GROU ND ON EARLIER OCCASION. ACCORDINGLY RELYING ON THE JUDGM ENT OF HONBLE SUPREME COURT IN THE CASE OF NTPC 229 ITR 3 83, WE ADMIT THE ADDITIONAL GROUNDS, AS THERE IS NO QUE STION OF INVESTIGATION OF FRESH FACTS ON THIS ISSUE. ACC ORDINGLY ADDITIONAL GROUND IS ADMITTED. 12. THE ADDITIONAL GROUND IN THIS APPEAL IS WITH RE GARD TO TREATMENT OF INVESTMENT IN SHARES, LEE DEPOSITS MDLR AIRLINES AND MISCELLANEOUS DEPOSITS AS BUSINESS L OSS. ITA NO.135/BANG/2018 PAGE 10 OF 13 WITH REGARD TO INVESTMENT IN SHARES AS BUSINESS LO SS, WE HAVE ALREADY HELD IN EARLIER PARAGRAPH THAT IT IS A CAPITAL LOSS AND HENCE THERE IS NO QUESTION OF ADJUDICATI NG THIS GROUND ON THIS ISSUE BY WAY OF ADDITIONAL GROUND. ACCORDINGLY, WITH REGARD TO THE TREATMENT OF LOSS O F INVESTMENT IS A CAPITAL LOSS, THEREFORE, ADDITIO NAL GROUND RELATED TO THIS ISSUE IS DISMISSED. 13. WITH REGARD TO TREATMENT OF LOSS OF LEE DEPOSIT S AND MISCELLANEOUS DEPOSITS, WE WILL ADJUDICATE THIS ISS UE ALONG WITH THE MAIN GROUND OF APPEAL. 14. NEXT GROUND IS WITH REGARD TO TREATING BELOW MENTIONED AMOUNT AS CAPITAL LOSS. 1) LEE DEPOSITS - MDLR AIRLINES - RS.29,35,650/- 2) MISCELLANEOUS DEPOSITS - RS.24,73,681/- 15. AN AMOUNT OF RS.29,35,650/- WAS GIVEN TO MDLR AIRLINES AS A DEPOSIT FOR TICKET BOOKING. ACCORDIN G TO ASSESSEE, THE SAID AMOUNT BECAME IRRECOVERABLE ON ACCOUNT OF SHUTDOWN OF AIRLINE OPERATION AND THE SA ME HAS CLAIMED AS BAD DEBT. SIMILARLY, MISCELLANEOU S DEPOSIT OF RS.24,73,681/- GIVEN AS DEPOSIT TO VARIO US SERVICE PROVIDERS AND BUSINESS OF THOSE PEOPLE WERE ITA NO.135/BANG/2018 PAGE 11 OF 13 SHUTDOWN AND SAME IS CLAIMED AS BAD DEBT U/S 37(1 ) OF THE ACT. 16. WE HAVE HEARD THIS ISSUE AND PERUSED THE MATERI AL ON RECORD. BEFORE THE LOWER AUTHORITIES, THE ASSE SSEE CLAIMED BAD DEBT U/S 36(2) OF THE ACT WHICH WAS DISALLOWED ON THE REASON IT HAS NOT SATISFIED ON D ECISIONS LAID DOWN IN SEC. 36(2) OF THE ACT. HOWEVER, BEFO RE US, THE ASSESSEE CLAIMED IT AS DEDUCTION U/S 37 OF TH E ACT AND WHICH WAS NOT EXAMINED BY THE LOWER AUTHORITIES . HENCE, IN THE INTEREST OF JUSTICE, WE REMIT THE ISS UE TO THE FILES OF AO FOR FRESH CONSIDERATION. THE ASSESSEE HAS TO PLACE NECESSARY EVIDENCES VIZ., NAME AND ADDRESS O F THE PARTIES CONCERNED. WITH THESE OBSERVATIONS, THESE TWO ISSUES ARE REMITTED TO THE FILES OF AO FOR FRESH CONSIDERATION. 17. NEXT GROUND IS WITH REGARD TO CONFIRMATION OF RS.1,28,301/- U/S 41(1) OF THE INCOME-TAX ACT. 18. THE ASSESSEE HAS SHOWN THE ABOVE AMOUNT AS OUTSTANDING FROM 5 PARTIES AND NO CONFIRMATION WAS FILED BY THE ASSESSEE FROM THOSE 5 PARTIES. HENCE, THE A BOVE AMOUNT WAS CONSIDERED AS CESSATION OF LIABILITY U/S 41(1) ITA NO.135/BANG/2018 PAGE 12 OF 13 OF THE ACT. BEFORE US ALSO ASSESSEE WAS NOT ABLE T O PRODUCE ANY EVIDENCE TO SUGGEST THAT THE SAID AMOUN T WAS ACTUALLY OUTSTANDING ON THE DATE OF BALANCE SHE ET. HENCE, LOWER AUTHORITIES JUSTIFIED IN TREATING IT A S A CESSATIONAL LIABILITY BY INVOKING THE PROVISIONS OF SEC. 41(1) OF THE ACT. 19. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH OCT, 2021 . SD/- SD/- (BEENA PILLAI) ( CHANDRA POOJARI) JUDICIAL MEMBER A CCOUNTANT MEMBER BANGALORE, DATED, OCT , 2021 / VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, B ANGALORE. ITA NO.135/BANG/2018 PAGE 13 OF 13 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..