M/S. G.K. DAIRY & MILK PRODUCTS PVT. LTD.,NEW DELHI vs. ADDL. CIT, NEW DELHI

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ITA 3064/DEL/2014Status: DisposedITAT Delhi02 September 2019AY 2009-104 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the addition was not justified as the liabilities pertained to earlier years and were brought forward. Since the AO had not doubted these brought-forward creditors in prior years, there was no basis for making an addition in the current assessment year.

What were the facts?

The Assessing Officer (AO) made an addition of Rs. 5,09,155/- under Section 41(1) of the Income Tax Act, treating outstanding sundry creditors for three consecutive years as income. The assessee contended that these creditors were still payable and intended to make payments.

What were the issues?

Whether outstanding sundry creditors, brought forward from previous years and still payable, can be treated as income under Section 41(1) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 41(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES “C”: DELHI

Before: SHRI BHAVNESH SAINI & SHRI O.P. KANT

Hearing: 21.08.2019Pronounced: 02.09.2019

This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-XV, New Delhi, Dated 31.03.2014 for the A.Y. 2009-2010.

2.

We have considered the rival submissions and perused the material on record.

2 ITA.No.3064/Del./2014 M/s. G.K. Dairy & Milk Products Pvt. Ltd., New Delhi.

3.

Learned Counsel for the Assessee did not pres Ground Nos. 1 and 2 of the appeal of assessee. The same are accordingly dismissed as not pressed.

4.

On Ground No.3, assessee challenged the addition of Rs.5,09,155/- under section 41(1) of the I.T. Act.

The A.O. noted that during the course of assessment proceedings it was seen that following sundry creditors are outstanding for the last three consecutive years : i. New Modest Engineers Rs.1,04,500/- ii. Graphics ads P. Ltd., Rs.3,16,761/- iii. JMD Projects P. Ltd., Rs. 87,894 ------------------ Rs.5,09,155/-

------------------- 4.1. The assessee contended before the A.O. that these creditors are still payable. The amount payable to them has accrued to them in the course of running of business and the company plans to make payment to these creditors on the basis of demand raised by them. The A.O. however, did not accept the contention of assessee and made the addition. The Ld. CIT(A) confirmed the addition.

3 ITA.No.3064/Del./2014 M/s. G.K. Dairy & Milk Products Pvt. Ltd., New Delhi.

5.

After considering the rival submissions, we are of the view that the addition is not justified. The liability exist in the books of account are pertain to the earlier years. The sundry creditors are brought forward from the earlier years which have not been doubted by the A.O. Therefore, there is no question of making addition in the assessment year under appeal. In view of the above, we set aside the Orders of the authorities below and delete the addition.

6.

In the result, appeal of Assessee partly allowed.

Order pronounced in the open Court.

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