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2019 (3) TMI 1290 - ITAT PUNEAddition u/s 41(1) - advances taken against the Bottles and the Cases - liability not written off - Value of Bottle write off in earlier years - cessation of liability - HELD THAT:- Where a deduction in respect of trading liability is incurred by the assessee and subsequently during any previous year assessee obtained some benefit in respect of such trading liability by way of remission or cessation thereof, the value of such benefit shall be deemed as chargeable to income-tax as income of that previous year. The existence of business in that year of taxation is not a requirement of law. From the above provisions, it is clear that the year of obtaining some benefit in respect of such trading liability is deemed to be the taxable income for the said year. Therefore, by honouring the said law and the discussion given in paras above, we are of the opinion that the A.Y. 2007-08 is not valid year in invoking the provisions of section 41(1) for taxing the value of the benefit. On this ground also, the revenue loses. From all the angles of the (1) non-trade liabilities nature; (2) absence of act of write off, i.e., cessation of liabilities; and (3) requirement of meeting the un-uniform year of invoking the provisions of section 41(1) and year of reaping of benefits in respect of said liabilities, we are of the opinion that the order of CIT(A) is required to be reversed on this issue. - Decided in favour of assessee.
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