ACIT 13(3)(1), MUMBAI vs. RUSHABH CONVERTORS P.LTD, MUMBAI

The Revenue is aggrieved by the decision of the learned CIT(A) in deleting the addition of Rs. 210.27 lakhs made by the Assessing Officer u/s. 41(1) of the Act. The assessee is aggrieved by the decision of the learned CIT(A) in 2 M/s. Rushabh Convertors Pvt. Limited confirming the addition of Rs. 44.97 lakhs made by the Assessing Officer u/s. 41(1) of the Act and hence filed the cross objection.

The assessee was earlier known as “Rainbow convertors P Ltd”. During the course of assessment proceedings, the Assessing Officer issued notices u/s.133(6) of the act to the loan creditors and trade creditors. We are now concerned with the addition made in respect of Trade creditor. The AO issued notices to the following trade creditors:- (a) M/s. Swastik Bio-Agro Tech P.Ltd. : Rs. 210.27 lakhs (b) M/s. Windsor Machines Ltd. : Rs. 44.97 lakhs.

Before Ld CIT(A), the assessee filed all details relating to M/s. Swastik Bio-Agro Tech P. Limited. It was submitted that the assessee is having regular dealings with them in the past and in the subsequent years. The learned CIT(A) forwarded those documents to the Assessing Officer and called for a remand report. Even though the Assessing Officer furnished the remand report, yet he did not comment anything about the documents furnished by the assessee. Hence, the learned CIT(A) proceeded to dispose of the issues on the basis of documents produced before him, viz., the confirmation, balance- sheet and copy of acknowledgment of return of income etc. Since the assessee demonstrated that the dealings with M/s. Swastik Bio-Agro Tech P. Ltd has not ceased and there were transactions between the parties in the subsequent years also, the learned CIT(A) deleted the addition of Rs. 210.27 lakhs. Since, the assessee did not file any detail relating to M/s. Windsor machines Ltd., he confirmed the addition of Rs. 44.97 lakhs. Both the parties are aggrieved by the decision of the learned CIT(A) in respect of issues decided against each of them.

We heard the parties and perused the record. The Learned AR took us to the paper book and submitted that the assessee is having regular dealings with M/s. Swastik Bio-Agro Tech P.Ltd. and accordingly he submitted that the balance outstanding in the name of above said party cannot be considered as ceased liability. Accordingly, he submitted that the learned CIT(A) was justified in deleting the addition of Rs. 210.27 lakhs.

Learned DR on the contrary, supported the order passed by the Assessing Officer.

Having heard the rival contention, we do not find any infirmity in the order passed by the learned CIT(A) in deleting the addition of Rs. 210.27 lakhs relating to M/s. Swastik Bio-Agro Tech P.Ltd., since the assessee has demonstrated that the liability has not ceased to exist during the year under consideration and consequently provisions of section 41(1) will not apply thereto. Accordingly, we confirm the order passed by the learned CIT(A) on this issue.

With regard to addition of Rs. 44.97 lakhs relating to M/s. Windsor Machines Ltd., the learned AR submitted that the assessee has not furnished any document to prove that the liability was still outstanding. He submitted that the assessee itself has written off the amount in financial year 2014-15 and accordingly offered the same as income in A.Y. 2015-16. Since the assessee has failed to show that the liability standing in the name of M/s Windsor Machines Ltd was payable as on 31.3.2012, we are of the view that the learned CIT(A) was justified in confirming the addition of Rs. 44.97 lakhs during the year under consideration.

The Learned AR submitted that if addition of Rs. 44.97 lakhs is confirmed in A.Y. 2012-13, then the Assessing Officer may kindly be directed to delete the amount offered by the assessee in A.Y. 2015-16, otherwise the same would result in the double assessment of the same item of income. We find merit in these contentions of the assessee. Accordingly we direct the 4 M/s. Rushabh Convertors Pvt. Limited assessee to move an appropriate petition before the Assessing Officer for A.Y. 2015-16 for deleting the amount of Rs. 44.97 lakhs offered by the assessee u/s. 41(1) of the Act. In view of the decision rendered by us in the preceding paragraph, the Assessing Officer may dispose of the petition of the assessee by excluding the amount that has been taxed u/s 41(1) in AY 2012-13.

In the result, the appeal of the Revenue and cross of the assessee are dismissed.