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2015 (11) TMI 1809 - AT - Income TaxAddition u/s 41(1) - cessation of liability - Liabilities of overseas creditors as continuously outstanding - HELD THAT:- Cessation of liability may occur either by the reason of liability becoming unenforceable in law by the creditor coupled with debtor declaring his/their intention not to owner his liability or by a contract between the parties or by discharge of the debt. We note that the Ld. AO invoked the provisions of section 41(1) by adding a sum being aggregates of amounts, shown as payable, to various sundry creditors as income u/s 41(1). AO came to a particular conclusion only on the premise that since the outstanding balances remained static, in the books of the assessee, for several years, therefore, there was no possibility of any claim being made by the creditors, therefore, he added to the income of the assessee - genuineness of the transactions entered in the books has not been questioned by the AO herself. For invoking the provisions of section 41, there should be an irrevocable cessation of liability without any possibility of being revived. In the present appeal, the assessee having acknowledges liability successively over the years reflected in his books as payable, therefore, we find no infirmity in the conclusion of CIT (Appeals), therefore, his stand is affirmed. Finally the appeal of the Revenue is dismissed.
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