M/s Vaishali Buildcon Pvt. Ltd., Hooghly V. ACIT, Circle-2, Chinsurah, Hooghly, Hooghly

ITA 1720/KOL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6612 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 29-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PINAKI MUKHERJEE AD DL
• Assessee Lawyers: S JHAJHARIA
• Keywords: Business income; Period of limitation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM] I.T.A NO. 1720/KOL/20 16 ASSESSMENT YEAR : 2008-0 9 M/S VAISHALI BUILDCON PVT. LTD. -VS- ACIT, CIRCLE-2, CHINSURAH [PAN: AABCV 0627 L] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI S. JHAJHARIA, AR FOR THE REVENUE : SHRI PINAKI MUKHERJEE, AD DL. CIT DATE OF HEARING : 17.04.2018 DATE OF PRONOUNCEMENT : 27.06.2018 ORDER THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-6, KOLKATA [ IN SHORT THE L D CITA] DATED 24.06.2016 AGAINST THE ORDER PASSED BY THE ACIT, CIRCLE-2, HOOGHLY [ I N SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT) DATED 20.12.2010 FOR THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE IS A COMPANY. THE ASSESSEE UNDERTAK ES CONTRACTS AND ALSO HAS INCOME FROM SALE OF LANDS. 3. THE ISSUE BEFORE ME IS THE ADDITION MADE U/S 41( 1) OF THE ACT. 4. AFTER HEARING THE RIVAL CONTENTIONS, PERUSING TH E MATERIAL ON RECORD, AND THE ORDER OF THE AUTHORITIES BELOW I HOLD AS FOLLOWS. 2 ITA NO.1720/KOL/2016 M/S VAISHALI BUILDCON PVT. LTD. A.YR .2008-09 2 5. THE LD. CIT(A) CONFIRMED THE ADDITION BY OBSERVI NG AS UNDER: 6. THE FOURTH GROUND OF APPEAL IS AGAINST ADDITION OF RS. 7,36,174/- U/S. 41, BEING AGGREGATE OF CERTAIN SUNDRY CREDITORS LISTED IN THE ASSESSMENT ORDER WHICH HAD BEEN BROUGHT FORWARD FROM EARLIER YEARS, ,IN RESPECT OF WHOM NO PAYMENTS WERE MADE DURING THE PREVIOUS YEAR FROM WHOM NO PURCHASES ALSO WERE MADE DURING THE PREVIOUS YEAR LEADING THE AO TO CONCLUDE THAT THE LIABILITIES HAD CEASED. IN THE WRITTEN SUBMISSION, THE APPELLANT FURNISHED DETAILS OF PURCHASES AND PAYMEN TS MADE DURING THE PREVIOUS YEAR FROM AND TO VARIOUS PARTIES AND IT IS FOUND' FROM T HE SAME THAT THE AO'S FINDING THAT NO PURCHASES FROM AND NO PAYMENTS TO THE CONCERNED PAR TIES WERE MADE DURING THE PREVIOUS YEAR IS CORRECT. THE APPELLANT ALSO FURNIS HED DETAILS OF PAYMENTS MADE TO THE SAID PARTIES DURING THE SUBSEQUENT YEARS. THE AO HA S NOT COMMENTED ON THE DETAILS FURNISHED IN THE REMAND REPORT AND THE APPELLANT HA S CONTENDED IN ITS REJOINDER THAT THE AO HAS ACCEPTED THE DETAILS FURNISHED BY NOT COMMEN TING ON THE SAME. ON CAREFUL SCRUTINY OF THE DETAILS FURNISHED, IT IS SEEN THAT THE APPELLANT HAS SIMPLY FURNISHED A LIST OF PAYMENTS MADE TO THE SAID PARTIES, MAINLY IN F.Y . 2010-11 WITHOUT SPECIFYING THE MODE OF PAYMENT AND FURNISHING ANY CONFIRMATIONS FR OM THE VARIOUS PARTIES REGARDING THE SAID PAYMENTS. A MERE LIST OF PAYMENTS CURIOUSL Y MADE IN F.Y.2010-11, THE YEAR IN WHICH THE ASSESSMENT WAS FINALIZED WITHOUT ANY SUPP ORTING EVIDENCE OR EVEN DETAILS OF THE RESPECTIVE MODES OF PAYMENT CANNOT BE CONSIDERE D AS SUFFICIENT EVIDENCE OF DISCHARGE OF THE IMPUGNED LIABILITIES. IN THE ABSEN CE OF ANY WORTHWHILE REBUTTAL OF THE AO'S FINDING, THE FINDING OF THE AO THAT THE RELEVA NT LIABILITIES HAD CEASED IS UPHELD AND THE ADDITION OF RS. 7,36,174/ - IS CONFIRMED. 7. THE FIFTH GROUND OF APPEAL IS AGAINST ADDITION O F AN AMOUNT OF RS. 1,40,732/ - U/S. 41 OF THE ACT IN RESPECT OF A SUM PAYABLE TO SHRI PROV AT BISWAS CONSIDERED AS CEASED LIABILITY BY THE AO FOR REASONS SIMILAR TO THOSE GI VEN BY THE AO FOR ADDING RS. 7,36,174/- U/S 41 WHICH HAVE BEEN DISCUSSED IN PARA 7. NO PAYMENTS WERE MADE TO SHRI PROVAT BISWAS DURING THE PREVIOUS YEAR AND A LETTE R SENT TO HIM BY THE AO FOR VERIFICATION REMAINED UNSERVED. HENCE, THE AMOUNT W AS ADDED AS A CEASED LIABILITY U/S 41 OF THE ACT. IN THE WRITTEN SUBMISSION, THE APPEL LANT FURNISHED LEDGER PAYMENTS OF RS. 1,40,732.75 DURING THE YEAR RESULTING IN LIQUIDATIO N OF THE LIABILITY WITHOUT ANY SUPPORTING CONFIRMATION FROM THE CREDITOR. THE NATU RE OF DETAILS AND EXPLANATION FURNISHED BY THE APPELLANT IS SIMILAR TO THAT IN RE LATION TO THE ADDITION OF RS. 7,36,174/- WHICH HAS ALREADY BEEN REJECTED BY ME. FOR THE SAME REASONS, I HOLD THAT THE APPELLANT HAS NOT FURNISHED SATISFACTORY EVIDENCE TO PROVE TH AT THE LIABILITY HAD NOT CEASED AND THE ADDITION OF RS. 1,40,732/- IS CONFIRMED. 6. THE HONBLE ITAT A BENCH OF BANGALORE TRIBUNAL I N ITA NO.1078/BANG/2014 FOR A.Y.2009-10 IN THE CASE OF GL EN WILLIAMS VS ACIT ORDER DATED 07.08.2015 ANALYSES SECTION 41(1) AND HELD AS FOLLO WS :- 14. AS FAR AS APPLICABILITY OF SECTION 41 (1) OF T HE ACT IS CONCERNED, THE QUESTION BEFORE US IS LIMITED TO THE APPLICABILITY OF SECTION 41 (1 ) OF THE ACT. THE SECTION IN SO FAR AS IT IS RELEVANT FOR OUR PURPOSE IS AS BELOW: 3 ITA NO.1720/KOL/2016 M/S VAISHALI BUILDCON PVT. LTD. A.YR .2008-09 3 'PROFITS CHARGEABLE TO TAX. 41. (1) WHERE AN ALLOWANCE OR DEDUCTION HAS BEEN MA DE IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF LOSS, EXPENDITURE OR TRADING LIA BILITY INCURRED BY THE ASSESSEE ( HEREINAFTER REFERRED TO AS THE FIRST-MENTIONED PERS ON) AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR, - (A) THE FIRST-MENTIONED PERSON HAS OBTAINED, WHETHE R IN CASH OR IN ANY OTHER MANNER WHATSOEVER, ANY AMOUNT IN RESPECT OF SUCH LOSS OR E XPENDITURE OR SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY -WAY OF REMISS ION OR CESSATION THEREOF, THE AMOUNT OBTAINED BY SUCH PERSON OR THE VALUE OF BENEFIT ACC RUING TO HIM SHALL BE DEEMED TO BE PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACC ORDINGLY CHARGEABLE TO INCOME-TAX AS THE INCOME OF THAT PREVIOUS YEAR, WHETHER THE BUSIN ESS OR PROFESSION IN RESPECT OF WHICH THE ALLOWANCE OR DEDUCTION HAS BEEN MADE IS IN EXIS TENCE IN THAT YEAR OR NOT; OR XXXX XX XX XXXXXX XX XXXXXX XX [EXPLANATION 1 - FOR THE PURPOSES OF THIS SUB-SECTI ON, THE EXPRESSION -LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF ANY SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF-SHALL INCLUDE THE REMISSION OR CESSATION OF ANY LIABILITY BY A UNILATERAL ACT BY THE FIRST MENTIONED PERSON UNDER CLAUSE (A) OR THE SUCCESSOR IN BUSINESS UNDER CLAUSE (B) OF THAT SUB-SECTION BY WA Y OF WRITING OFF SUCH LIABILITY IN HIS ACCOUNTS.] 15. EXPLANATION 1 WHICH WAS INSERTED W.E.F. 1.4.199 7 IS NOT ATTRACTED TO THE PRESENT CASE SINCE THERE WAS NO WRITING OFF OF THE LIABILITY TO PAY THE SUNDRY CREDITORS IN THE ASSESSEE'S ACCOUNTS. THE QUESTION HAS TO BE CONSIDERED DE HORS EXPLANATION 1 TO SECTION 41 (1). IN ORDER TO INVOKE CLAUSE (A) OF SEC.41 (1) OF THE ACT , IT MUST BE FIRST ESTABLISHED THAT THE ASSESSEE HAD OBTAINED SOME BENEFIT IN RESPECT OF TH E TRADING LIABILITY WHICH WAS EARLIER ALLOWED AS A DEDUCTION. THERE IS NO DISPUTE IN THE PRESENT CASE THAT THE AMOUNTS DUE TO THE SUNDRY CREDITORS HAD BEEN ALLOWED IN THE EARLIER AS SESSMENT YEARS AS PURCHASE PRICE IN COMPUTING THE BUSINESS INCOME OF THE ASSESSEE. THE SECOND QUESTION IS WHETHER BY NOT PAYING THEM FOR A PERIOD OF FOUR YEARS AND ABOVE TH E ASSESSEE HAD OBTAINED SOME BENEFIT IN RESPECT OF THE TRADING LIABILITY ALLOWED IN THE EARLIER YEARS. THE WORDS 'REMISSION' AND 'CESSATION' ARE LEGAL TERMS AND HAVE TO BE INTERPRE TED ACCORDINGLY. IN THE PRESENT CASE, THERE IS NOTHING ON RECORD TO SHOW THAT THERE WAS E ITHER REMISSION OR CESSATION OF LIABILITY OF THE ASSESSEE. IN FACT, THERE IS NO REFERENCE EIT HER IN THE ORDER OF THE AO OR CIT(A) TO THE EXPRESSION 'REMISSION OR CESSATION OF LIABILITY'. I N SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTION 41 (1) OF THE ACT CO ULD NOT BE INVOKED BY THE REVENUE. IN FACT THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF VARDHAMAN OVERSEAS LTD. (SUPRA) CLEARLY SUPPORTS THE PLEA OF THE ASSESSEE I N THIS REGARD. ON IDENTICAL FACTS, THE HON'BLE DELHI HIGH COURT ON THE APPLICABILITY OF SE C.41 (1) OF THE ACT, HELD: '12. THAT TAKES US TO THE NEXT QUESTION AS TO WHAT CONSTITUTES REMISSION OR CESSATION OF THE LIABILITY. IT CANNOT BE DISPUTED THAT THE WORDS 'REMISSION' AND 'CESSATION' ARE LEGAL TERMS AND HAVE TO BE INTERPRETED ACCORDINGLY. IN STATE OF MADRAS VS. GANNON 4 ITA NO.1720/KOL/2016 M/S VAISHALI BUILDCON PVT. LTD. A.YR .2008-09 4 DUNKERLEY & CO. AIR 1958 SC 560 VENKATARAMA AIYYAR J. EXPLAINED THE GENERAL RULE OF CONSTRUCTION THAT WORDS USED IN STATUTES MUST BE TAKEN IN THEIR LEGAL SENSE AND OBSERVED: 'THE RATIO OF THE RULE OF INTERPRETATION THAT WORDS OF LEGAL IMPORT OCCURRING IN A STATUTE SHOULD BE CONSTRUED IN THEIR LEGAL SENSE IS THAT THOSE WORDS HAVE, IN LAW, ACQUIRED A DEFINITE AND PRECISE SENSE AND THAT, ACC ORDINGLY, THE LEGISLATION MUST BE TAKEN TO HAVE INTENDED THAT THEY SHOULD BE UNDER STOOD IN THAT SENSE. IN INTERPRETING AN EXPRESSION USED IN A LEGAL SENSE, T HEREFORE, WE HAVE ONLY TO ASCERTAIN THE PRECISE CONNOTATION WHICH IT POSSESSE S IN LAW'. IN OUR OPINION, THIS RULE SHOULD BE APPLIED TO THE INTERPRETATION AND UNDERSTANDING OF THE WORDS 'REMISSION' AND 'CESSATION' USED IN THE S ECTION. 13. IN BOMBAY DYEING & MFG. CO. LTD. VS. STATE OF B OMBAY AIR 1958 SC 328 THE LEGAL POSITION WAS SUMMARIZED BY T.L. VENKATARAMA AIYAR, J., IN THE FOLLOWING MANNER: 'IT HAS BEEN ALREADY MENTIONED THAT WHEN A DEBT BEC OMES TIME-BARRED, IT DOES NOT BECOME EXTINGUISHED BUT ONLY UNENFORCEABLE IN A COURT OF LAW. INDEED, IT IS ON THAT FOOTING THAT THERE CAN BE STATUTORY TRANSFE R OF THE DEBTS DUE TO THE EMPLOYEES, AND THAT IS HOW THE BOARD GETS TITLE TO THEM. IF THEN A DEBT SUBSISTS EVEN AFTER IT IS BARRED BY LIMITATION, THE EMPLOYER DOES NOT GET, IN LAW, A DISCHARGE THEREFROM. THE MODES IN WHICH AN OBLIGATI ON UNDER A CONTRACT BECOMES DISCHARGED ARE WELL-DEFINED, AND THE BAR OF LIMITATION IS NOT ONE OF THEM. THE FOLLOWING PASSAGES IN ANSON'S LAW OF CONT RACT, 19TH EDITION, P. 383, ARE DIRECTLY IN POINT,' AT COMMON LAW LAPSE OF TIME DOES NOT AFFECT CONTRA CTUAL RIGHTS. SUCH A RIGHT IS OF A PERMANENT AND INDESTRUCTIBLE CHARACTE R, UNLESS EITHER FROM THE NATURE OF THE CONTRACT, OR FROM ITS TERMS, IT B E LIMITED IN POINT OF DURATION. BUT THOUGH THE RIGHT POSSESSES THIS PERMANENT CHARA CTER, THE REMEDIES ARISING FROM ITS VIOLATION ARE WITHDRAWN AFTER A CE RTAIN LAPSE OF TIME; INTEREST REIPUBLICAEUT SI FINIS LITIUM. THE REMEDIE S ARE BARRED, THOUGH THE RIGHT IS NOT EXTINGUISHED.' AND IF THE LAW REQUIRES THAT A DEBTOR SHOULD GET A DISCHARGE BEFORE HE CAN BE COMPELLED TO PAY, THAT REQUIREMENT IS NOT SA TISFIED IF HE IS MERELY TOLD THAT REQUIREMENT IS THE NORMAL COURSE HE IS NO T LIKELY TO BE EXPOSED TO ACTION BY THE CREDITOR.' (UNDERLINING, ITALICISED IN PRINT, OURS) THIS WAS ALSO THE VIEW TAKEN BY THE SUPREME COURT I N CIT VS. SUGAULI SUGAR WORKS (P) LTD. (SUPRA). 5 ITA NO.1720/KOL/2016 M/S VAISHALI BUILDCON PVT. LTD. A.YR .2008-09 5 14. SINCE THE TRIBUNAL HAS RELIED ON THE JUDGMENT O F THE SUPREME COURT IN THE CASE OF CIT VS. SUGAULI SUGAR WORKS (P) LTD. (SUPRA) WE MAY USEFULLY REFER TO THE DECISION IN ORDER TO APPRECIATE THE CONTROVERSY THEREIN AND THE RATIO LAID DOWN. THAT WAS A CASE OF A PRIVATE LIMITED COMPANY. IN RESPECT OF THE ASS T. YR. 1965-66, IT TRANSFERRED A SUM OF 3,45,000 FROM THE SUSPENSE ACCOUNT RUNNING FROM 1946-47 TO 1948-49 TO THE CAPITAL RESERVE ACCOUNT. THE ITO FOUND THAT A SUM O F 1,29,000 OUT OF THE ABOVE AMOUNT REPAYMENTED DEPOSITS AND ADVANCES WHICH WERE PAID BACK BY THE ASSESSEE. HE, THEREFORE, DEDUCTED THIS AMOUNT FROM THE AMOUNT OF 3,45,000 AND THE BALANCE OF 2,56,529 WAS BROUGHT TO ASSESSMENT UNDER S. 41 (1) OF THE ACT. THE ASSESSEE APPEALED UNSUCCESSFULLY TO THE AAC AND THEREAFTER CARRIED TH E MATTER IN FURTHER APPEAL TO THE TRIBUNAL. ITS CONTENTION BEFORE THE TRIBUNAL WAS TH AT THE UNILATERAL ENTRY OF TRANSFERRING THE AMOUNT FROM THE SUSPENSE ACCOUNT T O THE CAPITAL RESERVE ACCOUNT WOULD NOT BRING THE SAID AMOUNT WITHIN S. 41(1). TH E CONTENTION WAS ACCEPTED BY THE TRIBUNAL WHOSE DECISION WAS AFFIRMED BY THE CALCUTT A HIGH COURT CIT VS. SUGAULI SUGAR WORKS (P) LTD. (1981) 23 CTR (CAL) 226 : (198 3) 140 ITR 286 (CAL). THE REVENUE CARRIED THE MATTER IN THE APPEAL TO THE SUP REME COURT. THE CONTENTION OF THE REVENUE (AS NOTED AT P. 520 OF 236 ITR) WAS THAT ON THE FACTS OF THE CASE, THE LIABILITY CAME TO AN END AS A PERIOD OF MORE THAN 20 YEARS HA D ELAPSED AND THE CREDITORS HAD NOT TAKEN ANY STEPS TO RECOVER THE AMOUNT AND CONSE QUENTLY THERE WAS A CESSATION OF THE DEBT WHICH WOULD BRING THE MATTER WITHIN THE SC OPE OF S. 41(1). IT MAY BE NOTED THAT THE CONTENTION OF THE REVENUE IN THE CASE BEFO RE US IS PRECISELY THE SAME. TO RECAPITULATE, THE LEARNED STANDING COUNSEL CONTENDE D BEFORE US THAT SINCE A PERIOD OF MORE THAN 4 YEARS HAS ADMITTEDLY ELAPSED FROM THE D EBT ON WHICH THE DEBTS WERE INCURRED AND SINCE THE CREDITORS HAD NOT TAKEN ANY STEPS TO RECOVER THE AMOUNT, THERE WAS A CESSATION OF THE DEBTS WHICH BROUGHT THE MATT ER UNDER S. 41 (1). TURNING BACK TO THE JUDGMENT OF THE SUPREME COURT, WE FIND THAT THE JUDGMENT OF THE CALCUTTA HIGH COURT UNDER APPEAL WAS AFFIRMED FOR TWO REASONS. TH E FIRST REASON WAS BASED ON A JUDGMENT OF THE FULL BENCH OF THE GUJARAT HIGH COUR T IN CIT VS. BHARAT IRON & STEEL INDUSTRIES (1992) 105 CTR (GUJ)(FB) 331 : (1993) 19 9 ITR 67 (GUJ)(FB). IT WAS HELD BY THE SUPREME COURT THAT THE GUJARAT HIGH COURT WA S RIGHT IN SAYING THAT IN ORDER TO ATTRACT TAXABILITY UNDER S. 41(1) THE ASSESSEE SHOU LD HAVE OBTAINED, WHETHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER, ANY AMOUNT IN RESPE CT OF THE LOSS OR EXPENDITURE EARLIER ALLOWED AS A DEDUCTION. THIS PART OF THE RE ASONING, IN THE LIGHT OF THE AMENDED CL. (A) OF SUB-SO (1) OF S. 41 MAY NOT BE RELEVANT AFTER SUBSTITUTION OF THE SAID CLAUSE BY THE FINANCE ACT, 1992 W.E.F, 1ST APRIL, 1993, BY WHICH THE WORDS 'SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSI ON OR CESSATION THEREOF' WERE INSERTED. AFTER THE AMENDMENT, THEREFORE, IT IS NOT NECESSARY THAT IN RESPECT OF A TRADING LIABILITY EARLIER ALLOWED AS A DEDUCTION, T HE ASSESSEE SHOULD HAVE RECEIVED ANY AMOUNT, IN CASH OR OTHERWISE, BUT IT IS NECESSARY T HAT THE ASSESSEE SHOULD HAVE RECEIVED 'SOME BENEFIT' IN RESPECT OF SUCH TRADING LIABILITY. HOWEVER, WE HAVE ALREADY SEEN THAT THIS BENEFIT IN RESPECT OF TRADING LIABIL ITY SHOULD BE 'BY WAY OF REMISSION OR CESSATION OF THE LIABILITY' , AFTER THE AMENDMENT M ADE TO THE CLAUSE W.E.F. 1ST APRIL, 1993. THE SECOND PART OF THE REASONING OF THE SUPRE ME COURT IN CIT VS. SUGAULI SUGAR WORKS (P) LTD. (SUPRA) IS BASED ON THE INTERP RETATION OF THE WORDS 'CESSATION OR REMISSION' OF THE TRADING LIABILITY. THE SUPREME CO URT NOTICED A JUDGMENT OF THE BOMBAY HIGH COURT IN J.K. CHEMICALS LTD. VS. CIT (1 996) 62 ITR 34 (BORN) IN WHICH 6 ITA NO.1720/KOL/2016 M/S VAISHALI BUILDCON PVT. LTD. A.YR .2008-09 6 IT WAS EXPLAINED AS TO WHAT COULD BRING OUT A CESSA TION OR REMISSION OF THE ASSESSEE'S LIABILITY. THE OBSERVATIONS OF THE BOMBAY HIGH COUR T IN THE JUDGMENT CITED ABOVE ARE AS UNDER: 'THE QUESTION TO BE CONSIDERED IS WHETHER THE TRANS FER OF THESE ENTRIES BRINGS ABOUT A REMISSION OR CESSATION OF ITS LIABILITY. THE TRANSF ER OF AN ENTRY IS A UNILATERAL ACT OF THE ASSESSEE, WHO IS A DEBTOR TO ITS EMPLOYEES. WE FAIL TO SEE HOW A DEBTOR, BY HIS OWN UNILATERAL ACT, CAN BRING ABOUT THE CESSATION OR RE MISSION OF HIS LIABILITY. REMISSION HAS TO BE GRANTED BY THE CREDITOR. IT IS NOT IN DIS PUTE, AND IT INDEED CANNOT BE DISPUTED, THAT IT IS NOT A CASE OF REMISSION OF LIA BILITY. SIMILARLY, A UNILATERAL ACT ON THE PART OF THE DEBTOR CANNOT BRING ABOUT A CESSATI ON OF HIS LIABILITY. THE CESSATION OF THE LIABILITY MAY OCCUR EITHER BY REASON OF THE OPE RATION OF LAW, I.E., ON THE LIABILITY BECOMING UNENFORCEABLE AT LAW BY THE CREDITOR AND T HE DEBTOR DECLARING UNEQUIVOCALLY HIS INTENTION NOT TO HONOUR HIS LIABI LITY WHEN PAYMENT IS DEMANDED BY THE CREDITOR, OR A CONTRACT BETWEEN THE PARTIES, OR BY DISCHARGE OF THE DEBT THE DEBTOR MAKING PAYMENT THEREOF TO HIS CREDITOR. TRANSFER OF AN ENTRY IS NEITHER AN AGREEMENT BETWEEN THE PARTIES NOR PAYMENT OF THE LIABILITY. W E HAVE ALREADY HELD IN KOHINOOR MILFS CO. LTD. VS. CIT (1963) 49 ITR 578 (BORN) THA T THE MERE FACT OF THE EXPIRY OF THE PERIOD OF LIMITATION TO ENFORCE IT, DOES NOT BY ITS ELF CONSTITUTE CESSATION OF THE LIABILITY. IN THE INSTANT CASE, THE LIABILITY BEING ONE RELATI NG TO WAGES, SALARIES AND BONUS DUE BY AN EMPLOYER TO HIS EMPLOYEES IN AN INDUSTRY, THE PROVISIONS OF THE INDUSTRIAL DISPUTES ACT ALSO ARE ATTRACTED AND FOR THE RECOVER Y OF THE DUES FROM THE EMPLOYER, UNDER S. 33C(2) OF THE INDUSTRIAL DISPUTES ACT, NO BAR OF LIMITATION COMES IN THE WAY OF THE EMPLOYEES. ' 15. THE SUPREME COURT NOTICED THAT THE ABOVE OBSERV ATIONS OF THE BOMBAY HIGH COURT WERE QUOTED BY THE CALCUTTA HIGH COURT IN THE JUDGMENT UNDER APPEAL BEFORE THEM, AND OBSERVED AS UNDER WHILE UPHOLDING THE JUD GMENT OF THE CALCUTTA HIGH COURT : 'THIS JUDGMENT HAS BEEN QUOTED BY THE HIGH COURT IN THE PRESENT CASE AND FOLLOWED. WE HAVE NO HESITATION TO SAY THAT THE REASONING IS CORRECT AND WE AGREE WITH THE SAME. TO REINFORCE THE CONCLUSION, THE SUPREME COURT ALSO NOTICED ITS EARLIER JUDGMENT IN BOMBAY DYEING & MFG. CO. LTD. VS. STATE OF BOMBAY A IR 1958 SC 328 WHEREIN IT WAS HELD THAT THE EXPIRY OF THE PERIOD OF LIMITATION PR ESCRIBED UNDER THE LIMITATION ACT COULD NOT EXTINGUISH THE DEBT BUT IT WOULD ONLY PRE VENT THE CREDITOR FROM ENFORCING THE DEBT. 16. IN OUR OPINION, THE JUDGMENT OF THE SUPREME COU RT IN CIT VS. SUGAULI SUGAR WORKS (P) LTD. (SUPRA) IS A COMPLETE ANSWER TO THE CONTENTION OF THE LEARNED STANDING COUNSEL. IN THE CASE BEFORE THE SUPREME COURT FOR A PERIOD OF ALMOST 20 YEARS THE LIABILITY REMAINED UNPAID AND THIS FACT FORMED THE BASIS OF THE CONTENTION OF THE REVENUE BEFORE THE SUPREME COURT TO THE EFFECT THAT HAVING REGARD TO THE LONG LAPSE OF TIME AND IN THE ABSENCE OF ANY STEPS TAKEN BY TH E CREDITORS TO RECOVER THE AMOUNT, IT 7 ITA NO.1720/KOL/2016 M/S VAISHALI BUILDCON PVT. LTD. A.YR .2008-09 7 MUST BE HELD THAT THERE WAS A CESSATION OF THE DEBT S BRINGING THE CASE WITHIN THE SCOPE OF S. 41(1). IN THE CASE BEFORE US, THE IDENTICAL C ONTENTION HAS BEEN TAKEN ON BEHALF OF THE REVENUE, THOUGH THE PERIOD FOR WHICH THE AMOUNT REMAINED UNPAID TO THE CREDITORS IS MUCH LESS. IT WAS HELD BY THE SUPREME COURT THAT A UNILATERAL ACTION CANNOT BRING ABOUT A CESSATION OR REMISSION OF THE LIABILITY BECAUSE A REMISSION CAN BE GRANTED ONLY BY THE CREDITOR AND A CESSATION OF THE LIABILITY CAN ONLY OCCUR EITHER BY REASON OF OPERATION OF LAW OR THE DEBTOR UNEQUIV OCALLY DECLARING HIS INTENTION NOT TO HONOUR HIS LIABILITY WHEN PAYMENT IS DEMANDED BY THE CREDITOR, OR BY A CONTRACT BETWEEN THE PARTIES, OR BY DISCHARGE OF THE DEBT.' 16. FROM THE RATIO LAID DOWN IN THE AFORESAID DECIS ION, WE ARE OF THE VIEW THAT THERE IS NOTHING ON RECORD TO SHOW ANY CESSATION OR REMISSIO N OF LIABILITY BY THE CREDITOR OR EVEN AN UNILATERAL ACT BY THE ASSESSEE IN THIS REGARD. I N VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT THE IMPUGNED ADDITION CANNOT BE SUSTAINED AND THE SAME IS DIRECTED TO BE DELETED. APPLYING THE PROPOSITION OF LAW LAID DOWN IN THE CA SE LAW CITED ABOVE TO THE FACTS OF THE CASE, I HAVE NO OTHER ALTERNATIVE BUT TO DELETE THE ADDITION FOR THE REASON THAT THERE IS NEITHER REMISSION OR CESSATION OF LIABILITIES IN TH IS CASE. MERELY BECAUSE EVIDENCE OF REPAYMENT OF SUNDRY CREDITORS IS NOT PRODUCED, AN A DDITION U/S 41(1) CANNOT BE MADE. THE LD. CIT(A) HAS NOT FOLLOWED THE BASIC PROPOSITI ON OF LAW LAID DOWN BY THE COURT ON APPLICATION OF SECTION 41(1) OF THE ACT. THUS, I DE LETE THE DISALLOWANCE AND ALLOW THE GROUND OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 27.06.2018 SD /- [ J.SUDHAKAR REDDY] ACCOUNTANT MEMBER DATED : 27.06.2018 SB, SR. PS 8 ITA NO.1720/KOL/2016 M/S VAISHALI BUILDCON PVT. LTD. A.YR .2008-09 8 COPY OF THE ORDER FORWARDED TO: 1. M/S VAISHALI BUILDCON PVT. LTD., 60/A/12, H.C. B ANERJEE LANE, P.O.-KONNAGAR, HOOGHLY- 712235. 2. ACIT, CIRCLE-2, CHINSURAH, HOOGHLY-712101. 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S