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2022 (7) TMI 944 - AT - Income TaxAddition u/s 41(1) - remission of liability - amount written off by the assessee company in respect of unpaid expenses like commission, Royalty, knowledge know-how fees etc. to br payable to Scholler Textile AG - Assessee submitted that Scholler Textile AG hold 74% of the share capital and is a promoter of the company. accumulated losses of the company and the sum payable to the holding company remained unpaid - HELD THAT:- Scholler Textiles AG is the promoter of the assessee company. The assessee was making consistent losses for the last several years and therefore, the promoter company was supporting the assessee in continuing its survival. The sums payable to the promoter towards commission, knowhow fees and royalty are outstanding constantly for 2012-13 onwards. On careful examination of section 41(1) of the Act, we find that assessee has not obtained any amount in respect of the above liability outstanding and there is no remission of the liability. Unless, there is an evidence of remission or cessation of liability, provisions of Section 41(1) of the Act does not apply. In fact, in this case assessee has acknowledged the existence of liability in its balance sheet year to year, shown relationship with the creditor and reasons for non-payment. In view of this, we do not find any infirmity in the order of the learned CIT (A) in deleting the above addition. Accordingly, the order of the learned CIT (A) is confirmed. The appeal of the learned Assessing Officer is dismissed.
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