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2017 (10) TMI 1158 - HC - Income TaxAddition on account of bad debts written off - Held that:- As it has been recorded by the CIT(A) that the Assessing Officer was oblivious of the amendments made by the Finance Act w.e.f. 01.04.1989 which had been explained by the CBDT’s circular dated 23.1.1990 wherein in Para 6.6 it had been mentioned that the amendment was to rationalize the provisions regarding the allowability of all debts. It was laid down that the assessee had only to write off debts as irrevocable in its account and was not required to prove that they had become bad. Thus, in view of Section 36(1)(vii) read with Section 36(2) of the Act, the disallowance was correctly deleted. Addition on account of cessation of liabilities under Section 41(1) - Held that:- Apex Court in CIT Vs. Sugauli Sugar Works Private Limited, (1999 (2) TMI 5 - SUPREME Court) it was held that merely by virtue of the fact that a debt becomes time barred, the right of the creditor will not come to an end nor the liability will cease and in these circumstances, Section 41(1) of the Act was not attracted. Thus, when the liability qua the amount which was still standing in the balance sheet of the assessee, which fact had not been disputed by the Assessing Officer, the same could not be said to have ceased. Thus, the Tribunal did not interfere with the findings recorded by the CIT(A) on this issue. Addition on account of VRS expenses - deduction u/s 35DDA - Assessing Officer showed that addition had been made merely on the basis of wrong interpretation of the provisions contained in Section 35DDA - Held that:- Any deduction claimed for the financial year 2000-01 in question under Section 35DDA of the Act was to be considered for the assessment year 2001-02, when undisputedly, Section 35DDA was incorporated in the statute w.e.f. 01.04.2001. Thus, the assessee was certainly entitled to get the benefit for the same. Moreover, the Assessing Officer had allowed VRS payment in the earlier year and deduction claimed in the year under consideration was only a consequential relief for the 5th year. Further, Section 35DDA of the Act did not preclude the assessing authority to consider the VRS payment as revenue expenditure. Thus, the Tribunal rightly upheld the findings recorded by the CIT(A) on this issue Decided against revenue
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