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2020 (1) TMI 52 - AT - Income TaxAddition u/s 41(1) treating the outstanding as cessation of liability - HELD THAT:- It is not in dispute that the creditors were outstanding for more than three years. In our considered opinion, merely because the period of limitation prescribed under the Limitation Act has expired, would not extinguish the debt. As the liability still exists in the balance of the assessee, additions made u/s 41(1) are unwarranted and deserve to be deleted to be deleted in the light of ratio laid down SUGAULI SUGAR WORKS PVT. LIMITED [1999 (2) TMI 5 - SUPREME COURT] . Assessing Officer is directed to delete the addition. Addition of total advertisement and marketing expenses - HELD THAT:- It is true that there is no violation of provisions of section 40A(3) of the Act. Merely because some payments were made in cash would not justify the impugned addition. It is equally true that some of the expenses were supported by internal vouchers. In our considered opinion, an addition of ₹ 1 lakh would meet the ends of justice. We, accordingly, direct the AO to restrict the disallowance to ₹ 1 lakhs. The assessee will get relief of ₹ 2 lakhs.
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