M/s Alosha Vanijya Pvt. Ltd, Kolkata V. ITO, Ward 11(2), Kolkata, Kolkata

ITA 724/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0479 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 12-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOWDHURY
• Assessee Lawyers: M D SHAH
• Keywords: Business expenditure; Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SHRI S.S. GODARA, JM & SHRI M.BAL AGANESH, AM ] I.T.A NO. 724/KOL/201 7 ASSESSMENT YEAR : 2012-1 3 M/S ALOSHA VANIJYA PVT. LTD. -VS- ITO, WARD-11(2), KOLKATA. [PAN: AACCA 5623 N] (APPELLANT) (RESPOND ENT) FOR THE APPELLANT : SHRI M.D. SH AH, AR FOR THE RESPONDENT : SHRI ROBIN CHOWDHUR Y, ADDL. CIT DR DATE OF HEARING : 27.08.2018 DATE OF PRONOUNCEMENT : 14.09.2018 ORDER PER S.S. GODARA, JM 1. THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012- 13 ARISES FROM THE COMMISSIONER OF INCOME TAX (APPEALS)-19, KOLKATAS ORDER PASSED IN CASE NO.21/CIT(A)-19/W- 11(2)/KOL/2016-17 INVOLVING PROCEEDINGS UNDER SECT ION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE RAISED IN THE INSTANT APPEAL CHALLENGES CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION M AKING CESSATION OF LIABILITY ADDITION OF RS. 99,66,900/- U/S 41(1)(A)OF THE ACT. WE COME TO THE RELEVANT FACTS. THIS ASSESSEE IS AN NBFC. IT EMERGES FROM ASSESSMENT ORDER DATED 28. 03.2015 THAT THE ASSESSING OFFICER CAME ACROSS ITS DETAILS OF LOAN AND SETTLEM ENT ACCOUNTS INDICATING BALANCE OF M/S 2 ITA NO.724/KOL/2017 M/S ALOSHA VANIJYA PVT. LTD. A.YR. 2012-13 2 RELIGARE FINVEST LTD AS ON 31.03.2011 AS PER ASSESS EES BOOKS TO BE AT RS. 4,24,64,304/- ; ITS BALANCES OF THE OTHER PARTYS BOOKS TO BE AT RS. 9,42,19,917/-, SETTLEMENT AMOUNT VIDE DEED OF SETTLEMENT DATED 03.04.2011 OF RS. 3,2 5,00,000/- AND BALANCE WRITTEN OFF BY ALOSHA VANIJYA PVT. LTD. (ASSESSEE) TO CAPITAL RESERVE ACCOUNT, TO THE TUNE OF RS. 99,64,604/-; RESPECTIVELY. THERE IS NO DETAILED DIS CUSSION IN THE ASSESSMENT ORDER AS THE ASSESSING OFFICER HAS MERELY QUOTED SECTION 41(1) O F THE ACT TO MAKE THE IMPUGNED ADDITION OF RS. 99,64,604/- AS AN INSTANCE OF CESSA TION OF LIABILITY. THE CIT(A) HAS CONFIRMED THIS ADDITION IN LOWER APPELLATE ORDER RU NNING INTO 19 PAGES. THE CIT(A) OBSERVED IN PAGE 18 THAT THE ASSESSEE HAD FAILED TO PROVE THE MONEY IN QUESTION TO HAVE BEEN UTILIZED FOR CAPITAL PURPOSES. HE HOLDS THAT THE SUM IN ISSUE HAD BECOME USED FOR BUSINESS PURPOSES. ITS INTEREST HAD BEEN DEBITED I N ASSESSMENT YEAR 2008-09 AND THEREFORE IT WAS UTILIZED FOR BUSINESS PURPOSES ONL Y. THIS LEAVES THE ASSESSEE AGGRIEVED. 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS. THERE CAN BE NO DISPUTE ABOUT THE SETTLED LEGAL POSITION AS PER SEC TION 41(1) OF THE ACT THAT IT IS APPLICABLE IN CASE AN ASSESSEE OBTAINS ANY CASH OR IN ANY OTHER AMOUNT, IN RESPECT OF SUCH LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF. THE KEY TAKEAWAY HE REIN IS THAT THE BENEFIT IN ISSUE MUST ARISE FROM REMISSION OR CESSATION OF A TRADING LIA BILITY. THE ASSESSING OFFICER IS HIMSELF VERY CLEAR THAT THE ASSESSEE HAD WRITTEN OFF THE BA LANCE IN ISSUE AMOUNTING TO RS. 99,64,604/- IN CAPITAL RESERVE ACCOUNT INSTEAD OF T RADING ACCOUNT. THE SAME PRIMA FACIE INDICATES THAT THIS AMOUNT NEVER FORMED PART OF ANY TRADING LIABILITY. MR. CHOWDHURY VEHEMENTLY CONTENDS DURING THE COURSE OF HEARING TH AT THE ASSESSEE HAD UTILIZED THE SAME FOR ITS BUSINESS PURPOSES IN ASSESSMENT YEAR 2 008-09. WE FIND NO REASON TO ACCEPT THE INSTANT ARGUMENT. FIRSTLY IT GOES CONTRARY TO A SSESSEES BOOKS OF ACCOUNTS TREATING THE SAME IN QUESTION TO BE IN CAPITAL ACCOUNT. FURTHER THERE IS NO MATERIAL TO COME TO THE CONCLUSION THAT THE ASSESSEE HAD DEBITED/CLAIMED ON THE SAME AS ITS BUSINESS EXPENDITURE IN ANY OF THE PRECEDING ASSESSMENT YEARS. CASE LAW IN PCIT VS. TINNA FINEX LIMITED 3 ITA NO.724/KOL/2017 M/S ALOSHA VANIJYA PVT. LTD. A.YR. 2012-13 3 I.T.A. NO. 113/DEL/2016 DATED 15.02.2016 & CIT VS. SHIVALI BLOCKS PVT. LTD. 355 ITR 218 (DEL) HOLD THAT SECTION 41(1) OF THE ACT IS AT TRACTED ONLY IN CASE THE WRITE OFF OR CESSATION IN ISSUE FINDS PLACE IN PROFIT AND LOSS A CCOUNT. HONBLE APEX COURTS LATEST CONSTITUTIONAL BENCHS DECISION IN CIT VS. M/S DIL IP KUMAR & COMPANY & ORS HOLDS THAT IT IS THE REVENUES BURDEN TO PROVE APPLICATIO N OF THE TAXING PROVISION IN GIVEN FACTS AND CIRCUMSTANCES OF THE CASE. IT HAS FAILED TO DIS CHARGE THE SAME IS PROVING THE ASSESSEES BOOKS TO HAVE EVER CLAIMED THE IMPUGNED SUM AS A TRADING LIABILITY IN EARLIER ASSESSMENT YEARS. WE DELETE THE IMPUGNED SECTION 41 (1) ADDITION THEREFORE. 4. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 14.09.2018 SD/- SD/- [M. BALAGANESH] [ S.S.GODARA ] ACCOUNTANT MEMBER JUDICIAL MEM BER DATED : 14.09.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. M/S ALOSHA VANIJYA PVT. LTD., 40/15, MOORE AVENU E, REGENT PARK, KOLKATA-700040. 2. ITO, WARD-11(2), KOLKATA, 169, A.J.C. BOSE ROAD, KOLKATA-700014. 3..C.I.T(A).- 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