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2012 (7) TMI 213 - AT - Income TaxTrading liability - addition made u/s 41 on belief that liabilities have ceased to exist whereas assessee contended them to be existing liability - Held that:- Section 41 applies where a trading liability was allowed as a deduction in earlier years in computing the business income of the assessee and the assessee has obtained a benefit in respect of such trading liability in later year by way of remission or cessation of the liability. In the present case, the assessee has not written back the liability and Assessing Officer failed to demonstrate that liability has ceased. Unless the liabilities are written off in the books of account, provisions of section 41(1) cannot be applied - Deletion of addition justified - Decided in favor of assessee.
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