M/s. Mangat Rice & General Mills, SHAHKOT V. INCOME TAX OFFICER, NAKODAR

ITA 474/ASR/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9899 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-11-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 17-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Business expenditure; Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A NO.474/(ASR)/2017 ASSESSMENT YEAR: 2007-08 MANGAT RICE AND GENERAL MILLS, SHAHKOT. PAN: AABFM 5282B VS. ITO, NAKODAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. GAURAV DHALL, CA RESPONDENT BY: SH. CHARAN DAS, SR. DR DATE OF HEARING : 13.11.2018 DATE OF PRONOUNCEMENT: 06.12.2 018 ORDER PER SANJAY ARORA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, JALANDHAR ( CIT(A) FOR SHORT) DATED 23.05.2017, DISMISSING THE ASSESSEES APPEAL CONTES TING ITS ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) FOR ASSESSMENT YEAR (A.Y.) 2007-08 VIDE ORDER DATED 14.12.2009. 2. THE PRINCIPAL ISSUE ARISING IN THE INSTANT APPEA L IS THE MAINTAINABILITY IN LAW, AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, OF AN ADDITION FOR RS.4.39 LACS SUSTAINED BY THE FIRST APPELLATE AUTHORITY. THE BAC KGROUND FACTS ARE THAT THE ASSESSEE, A PARTNERSHIP FIRM IN THE BUSINESS OF RIC E MILLING, FILED ITS RETURN OF INCOME FOR THE YEAR ON 18.03.2008 DECLARING NIL I NCOME. ITS TRADE DEBTORS AND TRADE CREDITORS, REFLECTED AT RS.9.42 LACS AND RS.3 2.18 LACS RESPECTIVELY AS AT THE YEAR-END, I.E., 31.03.2007, PER ITS FINAL ACCOUNTS, WERE SOUGHT TO BE VERIFIED BY THE ITA NO.474/ASR/2017 (A.Y.2007-08) MANGAT RICE & GENERAL MILLS V. ITO 2 ASSESSING OFFICER (AO) BY CALLING INFORMATION THERE -FROM U/S.133(6) OF THE ACT. THE DISPUTE UNDER REFERENCE PERTAINS TO TWO CREDITO RS, AS UNDER: (A) JAI RAM JAGDISH CHANDRA, MEHATPUR (JRJC) : RS. 6,03,837.83 (B) SOHAN SINGH SATPAL, MEHATPUR (SSS) : RS.8,38,871.58 THE COPY OF THE ASSESSEES ACCOUNT IN THE BOOKS OF JRJC SHOWED A SUM OF RS.9,03,837.83 AS DUE FROM THE ASSESSEE, WHICH WAS DULY RECOVERED DURING FINANCIAL YEAR (F.Y.) 2004-05 (RS.4 LACS) AND F.Y. 2005-06 (RS.5.04 LACS), FULLY LIQUIDATING THE DEBT. THE ENTIRE AMOUNT WAS RECEIVE D IN CASH, NOT EXCEEDING RS.20,000/- PER DAY. THIS POSITION WAS CONFIRMED PE R DEPOSITION ON OATH U/S.131 OF THE ACT BY SHRI JAGDISH CHANDER, PROPRIETOR, ON 15. 07.2009. THE ASSESSEES ACCOUNTS REVEALED PAYMENT OF RS.3 LACS DURING F.Y. 2003-04, REDUCING THE CREDITORS BALANCE FROM RS.9.04 LACS TO RS.6.04 LACS AS ON 31. 03.2004, WHEREAFTER NO PAYMENT WAS MADE. THE PAYMENT RECORDED IN THE ASSESSES BOO KS WAS AGAIN IN CASH, AT RS.20,000/- PER DAY. SIMILARLY, COPY OF THE ASSESSE ES ACCOUNT IN THE BOOKS OF SSS RECORDED THE ASSESSEE TO BE A TRADE DEBTOR FOR RS.8 .39 LACS AS ON 01.04.2005, WHICH WAS RECEIVED DURING F.Y. 2005-06 (RS.4 LACS) AND TH E BALANCE (RS.4.39 LACS) DURING F.Y. 2006-07, I.E., THE RELEVANT PREVIOUS YEAR. THE ENTIRE PAYMENT RECEIVED WAS, AGAIN, IN CASH, NOT EXCEEDING RS.20,000/- PER DAY. THIS STATE OF AFFAIRS WAS CONFIRMED BY SHRI GURCHARAN SINGH S/O SMT. GURDEEP KAUR, PROPRIETOR, U/S.131OF THE ACT DATED 15.07.2009. THE COPIES OF THE ACCOUNT STATEMENTS AS WELL AS THE STATEMENTS U/S.131 WERE SUPPLIED TO THE ASSESSEE, W HO DENIED HAVING MADE ANY PAYMENTS, I.E. EXCEPT AS RECORDED IN ITS BOOKS OF ACCOUNT. SHRI PREM KUMAR, ITS MANAGING PARTNER, HAD IN FACT BEEN DECLARED A PROCL AIMED OFFENDER (PO) ON 15.09.2004 IN CRIMINAL PROCEEDINGS FILED AGAINST HI M BY MARKFED, A PSU, WHOSE PADDY WAS BEING MILLED BY THE ASSESSE-FIRM. IT WAS INCONCEIVABLE THAT A PERSON WHO HAD GONE IN HIDING WOULD SURFACE EVERY OTHER DA Y TO PAY CASH TO THESE FIRMS AT RS.20,000/-, I.E., DISCHARGING A TIME BARRED DEBT. THE ASSESSEE-FIRM WAS IN FACT ITA NO.474/ASR/2017 (A.Y.2007-08) MANGAT RICE & GENERAL MILLS V. ITO 3 FACING A FINANCIAL CRISIS, AND HAD NO FUNDS OR, IN FACT, SOURCE OF INCOME. ADDITIONS WERE MADE FOR THE AMOUNT OUTSTANDING IN THE ASSESSE ES BOOKS. THE MATTER TRAVELED TO THE TRIBUNAL WHICH, VIDE ITS ORDER DATED 30.12.2 017 (IN ITA NO.616/ASR/2013 COPY ON RECORD), SET ASIDE THE MATTER TO THE FILE O F THE FIRST APPELLATE AUTHORITY FOR A DECISION DE NOVO PER A SPEAKING ORDER AFTER PROVIDING ADEQUATE OPPOR TUNITY OF HEARING TO THE ASSESSEE. THE LD. CIT(A) HAS, IN THE SECOND ROUND, CONFIRMED THE ADDITIONS FOR THE CURRENT YEAR TO THE EXTENT OF THE PAYMENT RECORDED AS RECEIVED BY THE CREDITOR-FIRM, I.E., AT RS.4,38,872/- (IN THE C ASE OF SSS). FOR THE OTHER AMOUNTS, DIRECTIONS WERE ISSUED BY HIM U/S. 150(1) OF THE AC T TO, SIMILARLY, BRING THE AMOUNTS AS PAID BY THE ASSESSEE DURING THOSE YEARS, I.E., AS PER THE BOOKS OF THE CREDITORS, TO TAX. 3. I HAVE HEARD THE PARTIES AND PERUSED THE MATERIA L ON RECORD AND GIVEN A CAREFUL CONSIDERATION TO THE MATTER. THE ASSESSEES CASE IS THAT NO PAYMENT NOT RECORDED IN ITS BOOKS OF ACCOUNT HAS BEEN MADE BY IT, AND WHICH HAS BEEN RECORDED ON THEIR OWN BY THE TWO CREDITORS. CONSIDERING THE AMOUNT AS NO LONGER RECE IVABLE (FROM THE ASSESSEE), IT IS CLAIMED THAT THEY, TO PROTECT THE EROSION OF THEIR CAPITAL, HAD BOOKED THEIR OWN MONEY AS CASH RECEIVED FROM THE ASSESSEE. THAT IS, THE ENTRIES OF CASH RECEIVED FROM THE ASSESSEE IN THEIR ACCOUNTS ARE FALSE, AND NO ADVERSE CONSEQUENCE ON THAT BASIS SHOULD FOLLOW. ON BEING QUESTIONED BY THE BEN CH THAT, ASSUMING SO, SO THAT SECTION 69A MAY NOT APPLY, HOW WOULD SECTION 41(1), ALSO INVOKED BY THE REVENUE, NOT BECOME APPLICABLE INASMUCH AS THE CRED ITORS HAVE DENIED ANY DEBT AS DUE TO THEM BY THE ASSESSEE AS ON 31.03.2007. THE L D. COUNSEL, SHRI DHALL, WOULD SUBMIT THAT SECTION 41(1) WOULD NOT APPLY AS THE AS SESSEE STILL ADMITS ITS LIABILITY, TO THE EXTENT STATED, TO THE NAMED CREDITORS. THE S AME FINDING REFLECTION IN THE ASSESSEES BOOKS OF ACCOUNT FROM YEAR TO YEAR, FOR WHICH HE WOULD REFER TO THE BALANCE-SHEETS FOR THE LATER YEARS, ENCLOSED AS PAR T OF THE PAPER-BOOK (PB), THE ITA NO.474/ASR/2017 (A.Y.2007-08) MANGAT RICE & GENERAL MILLS V. ITO 4 SAME AMOUNTS TO AN ADMISSION OF LIABILITY, SO THAT THE LIMITATION FOR LEGAL RECOVERY THEREOF WOULD ALSO NOT APPLY. THE REVENUES CASE, O N THE OTHER HAND, IS THAT THE ENTRIES IN THE BOOKS OF THE CREDITORS ARE BACKED BY THEIR STATEMENTS U/S.131, WHICH ARE ADMISSIBLE IN EVIDENCE. FURTHER, WHY WOULD A CR EDITOR SHOW RECEIPT OF MONEY FROM A DEBTOR WITHOUT ACTUALLY RECEIVING IT, JEOPAR DIZING HIS RECOVERY, IF ANY, IN FUTURE? WHY, HE WOULD RATHER CLAIM THE BAD DEBT AS A TAX DEDUCTIBLE EXPENDITURE. THERE IS THUS NO MERIT IN THE ASSESSEES STATING OF HAVING NOT PAID ANY MONEY TO THE CREDITORS. IT IS NOT UNUSUAL FOR A DEBTOR TO ARRIVE AT A COMPRISE WITH A CREDITOR AND PAY IN INSTALLMENTS OVER A PERIOD OF TIME, I.E., IN TIME OF FINANCIAL DIFFICULTY, AS INDEED THE ASSESEE ADMITTEDLY HAS WITH JRJC IN THE PAST. BESIDES, THE PAYMENT COULD ALSO BE PROMPTED BY CONSIDERATION OF SAFEGUAR DING ITS REPUTATION IN THE MARKET; THE ASSESSEE HAVING BEEN ALREADY EMBROILED IN A DISPUTE WITH A GOVERNMENT AGENCY. THE PAYMENTS MAY NOT NECESSARILY HAVE BEEN MADE IN INSTALLMENTS OF RS. 20,000/-, WHICH IS SO BOOKED ONLY TO ESCHEW NON-DED UCTION AS BUSINESS EXPENDITURE U/S. 40A(3/3A). IN ANY CASE OF THE MATT ER, DENIAL OF THE ASSESSEES LIABILITY THERETO BY THE CREDITORS WOULD ATTRACT SE CTION 41(1) INASMUCH AS THE LIABILITY STANDS EXTINGUISHED, I.E., CEASES TO EXIS T. ITS REFLECTION IN THE ASSESSEES ACCOUNT, WHICH PERHAPS CONTINUES TO DATE, WOULD BE OF LITTLE CONSEQUENCE INASMUCH AS, IN EFFECT AND SUBSTANCE, IT DOES NOT REPRESENT AN ACTUAL LIABILITY TO A TRADE CREDITOR/S. MY FIRST OBSERVATION IN THE MATTER, AND EVEN AS OBS ERVED DURING HEARING, IS THAT EVEN ASSUMING THAT THE CREDITORS HAVE NOT BEEN PAID BY THE ASSESSEE, THEIR DENIAL OF THE ASSESSEES IMPUGNED LIABILITY TO THEM , WOULD AMOUNT TO A REMISSION OF A TRADE LIABILITY, ATTRACTING SECTION 41(1) OF THE ACT, WHICH READS AS UNDER: PROFITS CHARGEABLE TO TAX. 41. (1) WHERE AN ALLOWANCE OR DEDUCTION HAS BEEN MADE I N THE ASSESSMENT FOR ANY YEAR IN RESPECT OF LOSS, EXPENDITURE OR TRADING LIABILITY I NCURRED BY THE ASSESSEE (HEREINAFTER REFERRED TO AS THE FIRST-MENTIONED PERSON) AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR, ITA NO.474/ASR/2017 (A.Y.2007-08) MANGAT RICE & GENERAL MILLS V. ITO 5 (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 REMISSION OR CESSA TION THEREOF, THE AMOUNT OBTAINED BY SUCH PERSON OR THE VALUE OF BENEFIT ACCRUING TO HIM SHAL L BE DEEMED TO BE PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE T O INCOME-TAX AS THE INCOME OF THE PREVIOUS YEAR, WHETHER THE BUSINESS OR PROFESSION I N RESPECT OF WHICH THE ALLOWANCE OR DEDUCTION HAS BEEN MADE IS IN EXISTENCE IN THAT YEA R OR NOT; OR (B) THE SUCCESSOR IN BUSINESS HAS OBTAINED, EXPLANATION 1. FOR THE PURPOSES OF THIS SUB-SECTION, THE EXPRESSIO N LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF ANY SUCH TRADING LIABILI TY BY WAY OF REMISSION OR CESSATION THEREOF SHALL INCLUDE THE REMISSION OR CESSATION O F 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 WAY OF WRITING OFF SUCH LIABILITY IN HIS ACCOUNTS. THE ASSESSEE STATING THAT IT IS LIABLE TO THE CREDI TORS TO THE STATED EXTENT, AS BORNE OUT BY ITS AUDITED ACCOUNTS, WOULD AMOUNT TO NAUGHT IN VIEW OF THEIR STATING ON OATH WHICH HAS EVIDENTIARY VALUE, OF HAVING RECEIVED THE IR DUES FROM THE ASSESSEE OVER A PERIOD OF TIME, WHICH IS IN AGREEMENT WITH THEIR BO OKS OF ACCOUNT. THE SAID STATEMENTS HAVE NOT BEEN REBUTTED IN ANY MANNER, AS THROUGH CROSS EXAMINATION OR IN ANY OTHER MANNER. THAT IS, EITHER WAY, THE ASSESSEE CANNOT SUCCEED . IT WOULD BE A DIFFERENT MATTER WHERE THE DECISION RESTED ONLY U PON A FINDING AS TO WHETHER, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE CAN BE SAID TO HAVE PAID OR, AS THE CASE MAY BE, NOT PAID THE TWO TRADE CRED ITORS UNDER REFERENCE, AND WHICH WOULD REQUIRE THE TRIBUNAL TO EXAMINE CLOSELY THE F ACTS, SIFTING THAT PROVED FROM THAT UNPROVED, TO ARRIVE AT A FINDING OF FACT, WHIC H MAY, AT ANY RATE, BE ISSUED BASED ON A PREPONDERANCE OF PROBABILITIES. IT COULD BE, A S CLAIMED THE ASSESSEE BEING UNABLE TO PAY, THAT THE PARTIES, WITH A VIEW TO INT RODUCE THEIR UNDISCLOSED INCOME/ WEALTH WITHOUT TAX, ROUTED THE SAME AS CASH RECEIVE D FROM THE ASSESSEE. THE SAME IN FACT IS A SERIOUS CHARGE, I.E., OF THE TWO CREDI TORS BEING TAX EVADERS, WHICH CANNOT BE MADE WITHOUT A FIRM BASIS, AT LEAST ONE OF WHICH A COURT COULD TAKE JUDICIAL NOTICE. THAT APART, IT INVOLVES ASSUMPTIONS, FOR WH ICH THERE IS NO BASIS, SO THAT IT WOULD ONLY BE PRESUMPTUOUS. IN FACT, NO TAX ADVANTA GE ARISES AS THEY COULD HAVE, ITA NO.474/ASR/2017 (A.Y.2007-08) MANGAT RICE & GENERAL MILLS V. ITO 6 EQUIVALENTLY, CLAIMED THE ENTIRE AMOUNT AS A BAD DE BT WHILE INTRODUCING THEIR INCOME/FUNDS, ASSUMING SO, AS INCOME, SO THAT THERE IS NOT NET TAX LIABILITY. THE CLAIM OF BAD DEBTS IN ACCOUNTS, BASED AS IT IS ON T HE BEST JUDGMENT OF THE MANAGEMENT, DOES NOT PREJUDICE THE CREDITORS RIGHT TO RECOVER THROUGH PERSUASION OR RECOURSE TO THE LEGAL PROCESS. THE LIMITATION, E VEN AS STATED BY SHRI DHALL, RUNS FROM THE LAST ACKNOWLEDGEMENT OF THE DEBT, SO THAT THE DEBTS WERE NOT BARRED BY TIME DURING THE PERIOD THE PAYMENT IS STATED TO HAV E BEEN RECEIVED FROM THE ASSESSEE, WHO ADMITTEDLY HAS NOT PAID THE CREDITORS EVEN TO DATE. TO, THOUGH, NO EXPLANATION OR REASON FOR NON-PAYMENT, EVEN AS THE BALANCE-SHEETS FOR THE SUBSEQUENT YEARS REFLECT BUSINESS. SUCH A PAYMENT W OULD, WHILE PROVING ITS LIABILITY THERETO AS EXISTING, ONLY BE TO THE BENEF IT OF THE CREDITORS, EVEN IF CONSTITUTING THEIR INCOME LIABLE TO TAX. WE COULD G O ON FURTHER. HOWEVER, IT IS NOT NECESSARY TO DWELL FURTHER IN THE MATTER; EVEN THE FOREGOING DISCUSSION BEING MADE ONLY TO EMPHASIZE THAT A DECISION AS TO PAYMENT A MATTER OF FACT, ALSO, ON BALANCE, CANNOT BE SAID TO BE SKEWED IN FAVOUR OF THE ASSESS EE, EVEN AS THERE IS SUBSTANCE IN THE ASSESSEES VERSION OF BEING UNABLE TO PAY IN VI EW OF THE PRECARIOUS SITUATION, THOUGH NON-REFLECTION OF CASH IN ITS ACCOUNTS, BY I TSELF, MAY NOT BE CONCLUSIVE OF THE MATTER, AS ALSO OBSERVED BY THE TRIBUNAL IN THE FIRST ROUND. THIS IS AS EVEN CONSIDERING NON-PAYMENT, AS AFORE-STATED, THE CREDI TOR/S CLAIMING TO HAVE RECEIVED THE PAYMENT, THE SAME CEASES TO EXIST; THE ASSESSEE BEING NOT LONGER LIABLE TO PAY THE SAME. THE ASSESSEE HAS, WITHOUT DOUBT, BENEFITE D FROM IT BEING NO LONGER LIABLE IN RESPECT OF A TRADE LIABILITY, DEDUCTION QUA WHICH STANDS CLAIMED AND ALLOWED IN AN EARLIER YEAR IN COMPUTING BUSINESS INCOME, SO TH AT IT STANDS TO GAIN TO THAT EXTENT. THE SAME WOULD STAND TO BE REGARDED AS BUSI NESS INCOME, OR A BENEFIT OR ADVANTAGE, OF COMMERCIAL NATURE, ARISING FROM AND I N THE COURSE OF BUSINESS, I.E., ON FIRST PRINCIPLES, SO AS TO REGARDED AS BUSINESS INCOME, EVEN IF IT WERE NOT TO BE CODIFIED U/S.41(1) REPRODUCED SUPRA (REFER: CIT V. T.V. SUNDARAM IYENGAR & SONS ITA NO.474/ASR/2017 (A.Y.2007-08) MANGAT RICE & GENERAL MILLS V. ITO 7 LTD . [1996] 222 ITR 344 (SC)) EVEN IF, THEREFORE, AGRE EING WITH THE ASSESSEE, THAT IT DID NOT PAY THE CREDITORS, WHO WERE THEREFORE PA ID BY SOMEONE ELSE, WHOEVER IT MIGHT BE, THE ASSESSEE STANDS TO GAIN TO THAT EXTEN T QUA A TRADE LIABILITY ARISING IN THE COURSE OF ITS BUSINESS. RATHER, IT IS ONLY AS THE SAME IS NOT PAID BY THE ASSESSEE THAT IT BENEFITS FROM THE CESSATION/ REMISSION OF L IABILITY, AND S. 41(1) GETS ATTRACTED. TO PUT SUCCINCTLY, IN EACH OF THE THREE SCENARIOS T HE ASSESEE IS LIABLE TO BE ASSESSED FOR THE AMOUNT STATED AS RECEIVED BY THE C REDITORS DURING A PARTICULAR YEAR. IF THE ASSESSEE PAID THE CREDITORS, S. 69A WOULD CO ME INTO PLAY. IF, ON THE OTHER HAND, SOMEONE PAID THEM ON ASSESSEES BEHALF, S. 41 (1) WOULD GET ATTRACTED ON ACCOUNT OF CESSATION OF A TRADE LIABILITY; THE ASSE SSEE ADMITTEDLY NOT INCURRING ANY OTHER LIABILITY IN LIEU OF SUCH PAYMENT. THIRDLY, I F, AS CLAIMED, NO AMOUNT STANDS PAID TO THE CREDITORS WITH THEY INTRODUCING THEIR OWN MONEY, S. 41(1) WOULD AGAIN GET ATTRACTED ON ACCOUNT OF REMISSION OF THE TRADE LIABILITY. I, THEREFORE, HAVE NO HESITATION IN UPHOLDING THE ASSESSMENT OF RS.4,38,8 72/- AS THE ASSESSEES INCOME, BEING THE AMOUNT BY WHICH THE ASSESSEES LIABILITY TO SSS HAS UNDERGONE REDUCTION DURING THE CURRENT YEAR. THOUGH ONE COULD ARGUE THA T THE ASSESSEES ACCOUNTS REFLECTING A TOTAL LIABILITY TO THE TRADE CREDITORS AT RS.14.43 LACS, WHICH DOES NOT EXIST AS AT THE YEAR-END, SO THAT THE ENTIRE AMOUNT OUGHT TO BE, AS BY THE AO, ASSESSED AS INCOME, IT NEEDS TO APPRECIATED, THAT T HE EVIDENCE WITH THE REVENUE, IN THE FORM OF DENIAL OF THE ASSESSEES DEBT IN THEIR FAVOUR BY THE TRADE CREDITORS, ITSELF STATES OF REDUCTION IN THE SAID LIABILITY OVER A PE RIOD OF TIME. ACCORDINGLY, I AGREE WITH THE LD. CIT(A) THAT THE REDUCTION OBTAINING DU RING A PARTICULAR YEAR IS TO BE ASSESSED AS INCOME FOR THAT YEAR. HIS DIRECTIONS, A CCORDINGLY, TO THAT EFFECT TO THE AO U/S. 150(1), SUBJECT TO THE FULFILLMENT OF THE C ONDITIONS U/S. 150(2), CANNOT BE FAULTED. HOWEVER, OF THE PAYMENT OF RS. 4 LACS TO J RJC DURING F.Y. 2004-05, RS.3 LACS STANDS ALREADY PAID DURING F.Y. 2003-04 AS PER THE ASSESSEES ACCOUNTS. ACCORDINGLY, IT IS ONLY THE DIFFERENCE, I.E., RS.1. 0 LAC, THAT CAN BE ASSESSED AS ITA NO.474/ASR/2017 (A.Y.2007-08) MANGAT RICE & GENERAL MILLS V. ITO 8 INCOME U/S. 41(1) FOR AY 2005-06 ON THAT ACCOUNT. T HIS ASPECT SHALL BE DULY CONSIDERED BY THE AO WHILE GIVING EFFECT TO THE SAI D DIRECTIONS BY THE LD. CIT(A). APART THERE-FROM, I, THEREFORE, FIND NO REASON TO I NTERFERE WITH HIS FINDINGS. I DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS DISPOSED OF ON THE TERMS AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 06, 2018 SD/- (SAN JAY ARORA) ACCOUNTANT MEMBER DATE: 06.12.2018 PKK COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE (2) THE ITO CONCERNED (3) THE CIT(A) (4) THE CIT CONCERNED (5) THE SR.D.R., I.T.A.T. TRUE COPY BY ORDER