Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (9) TMI 1213 - AT - Income TaxAddition u/s 41(1) - benefit by way of remission or cessation of liability - HELD THAT:- There is no dispute that there was a liability in existence in the books of the assessee. The AO has to go according to the books of accounts of the assessee, while computing the income of the assessee but not as per the books of accounts of the creditor. As per section 41(1) of the Act any allowance or deduction made in the assessment year in respect of loss or expenditure or trading liability incurred by the assessee and subsequently obtained the benefit by way of remission or cessation, the same required to be taxed under the profits and gains of the business of income of that person of the previous year The expression ‘loss or expenditure or some benefit in respect of any such trading liability by any unilateral act by the first mentioned person under clause(a) or the successor in business under clause (b) of section 41(1) of the Act. In the instant case, the first mentioned person is the assessee, but not the creditor. In the instant case, the assessee has not written off the liability, though the creditor has written off the debt. Though the debtor has no legal right to enforce the debt, still the assessee is having liability to make the payment, till the assessee writes off the debt. In these facts and circumstances there is no case for making addition u/s 41(1) of the Act. ITAT Kolkata in the case of M/s Sonodyne Television Co. Ltd [2018 (1) TMI 1454 - ITAT KOLKATA] dismissed the appeal of the revenue on similar fact - There is no case for invoking the provision u/s 41(1) in the case of the assessee. Accordingly, appeal of the assessee is allowed.
|