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2016 (7) TMI 749 - GUJARAT HIGH COURTAddition invoking sec 41(1) - remission or cessation of liability - ITAT deleted the addition - Held that:- There is nothing on record to suggest that there was any remission or cessation of liability in the previous year relevant to the assessment year under consideration. Even if the submission advanced by the learned counsel for the revenue that some of the creditors had written off the liability in their books was to be accepted, even then, such liability would have ceased in the year in which such amounts were written off in the books of those creditors. However, it is not the case of the Assessing Officer that the amounts were written off in the year under consideration. In these circumstances, the question of invoking section 41(1) of the Act would not arise. Moreover, this court is in agreement with the view adopted by the Commissioner (Appeals), as confirmed by the Tribunal, that a unilateral act on the part of the parties does not in any way translate into income in the hands of the assessee. As is evident from the material on record, the assessee has shown these liabilities in its books and continues to show the same. Thus, the assessee has not written off the liabilities in its books of account. There is nothing on record to indicate that the creditors have given up their rights to recover such amounts from the assessee. Under the circumstances, it is clear that the addition is based upon an assumption on the part of the Assessing Officer that the liabilities have ceased to exist. The Tribunal, therefore, did not commit any error in upholding the deletion made by the Commissioner (Appeals). - Decided against revenue
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