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2020 (9) TMI 627 - AT - Income TaxAddition u/s 41(1) - liability outstanding in the books of the assessee towards sundry creditors - CIT(A) deleted the addition partly - HELD THAT:- The assessee is not in appeal against the confirmation of additions by the ld. CIT(A) in respect of both the parties to the extent noted above. Except for these two parties, the AO, in the remand proceedings, did not point out any inconsistency calling for the applicability of section 41(1). This section, in turn, states that where an allowance or deduction has been made in the assessment for any year in respect of loss or expenditure or trading liability incurred by the assessee and subsequently the assessee obtains some benefit in respect of such trading liability etc. by way of remission or cessation thereof, the amount of benefit obtained by the assessee becomes income u/s. 41(1). It is evident that obtaining of any benefit by the assessee in the form remission or cessation is sine qua non for invoking section 41(1). If the liability continues to exist, the factum of delay in payment does not ipso facto requires addition u/s. 41(1). We are confronted with a situation in which the assessee categorically stated before the AO that all the creditors were genuinely payable and there were some transactions in their accounts as well. CIT(A) was justified in coming to the conclusion that addition was not called for u/s.41(1) of the Act pro tanto. - Decided against revenue.
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