Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2013 (2) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (2) TMI 523 - HC - Income TaxAddition u/s 41(1) – In A/Y 2002-03, assessee has shown creditors of Rs.52.53 lakhs which included number of creditors brought forward from earlier years and were shown as outstanding even in later returns furnished by the assessee including the year 2004-2005 - Assessee furnished to the AO only list of creditors without their addresses and PAN numbers – As per AO these creditors were not genuine and invoked Section 41(1) – Held that:- As decided in Sugauli Sugar Works(P) Ltd.[ 1999 (2) TMI 5 - SUPREME COURT ] unless there is a cessation of liability or there is a remission of liability by the creditor, the liability subsists and, therefore, even if the entries are made to write back the expenditure, the amount so written back cannot be added in the income of the assessee as per the provision of section 41(1) of the Act - Assessee has not obtained any benefit either by way of remission or cessation of any liability while the aforesaid liabilities are continually admitted by the assessee in their balance sheet. Further section 41(1) of the Act would naturally not apply. Section 41(1) applies in a case where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee and subsequently, during any previous year he has obtained whether in cash or in any other manner any amount in respect of such loss or expenditure or trading liability by way of remission or cessation thereof, the amount obtained. In the present case, Revenue's case is that there was no genuine trading liability incurred by the assessee. Question of remission or cessation thereof would not arise – Against the revenue.
|