TMI Blog2014 (2) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... d apply in a case where there has been remission or cessation of liability during the year under consideration subject to the conditions contained in the statute being fulfilled - There was nothing on record to suggest there was remission or cessation of liability that too during the previous year relevant to the assessment year 2007-08 which was the year under consideration - The Assessing Officer undertook the exercise to verify the records of the so called creditors - thus, the amount in question cannot be added back as a deemed income under section 41(c) of the Act – Decided against Revenue. - Tax Appeal No.588 of 2013 - - - Dated:- 4-2-2014 - Akil Kureshi And Sonia Gokani, JJ. For the Appellant : Mr Pranav G Desai, Adv. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied section 41(1) of the Income Tax Act, 1961 and added the entire sum as income of the assessee. The Assessing Officer held that liabilities have ceased to exist within the meaning of section 41(1) of the Act and therefore, the same should be deemed to be the income of the assessee. The assessee carried the matter in appeal. CIT (Appeals) rejected the appeal. The assessee thereupon approached the Tribunal. The Tribunal by the impugned judgment, allowed the assessee s appeal making following brief observations: 7. We have heard both the parties. There is no finding that the impugned liabilities were trading liabilities in respect of which the assessee had obtained any benefit or advantage either by way of their remission or cess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other hand, learned counsel Shri Soparkar for the assessee supported the order of the Tribunal contending that there had been no cessation of liability. Section 41(1) of the Act would not apply. In any case, it was not established that such liability ceased during the year under consideration. The counsel relied on following decisions: (I) In the case of CIT v. Miraa Processors (P) Ltd. (2012) 208 Taxman 93 (Guj.) in which Division Bench of this Court observed as under: 14. As pointed out in the case of Sugauli Sugar Works (P) Ltd. (supra), vide the last five lines of the paragraph-6 of the judgment, the question whether the liability is actually barred by limitation is not a matter which can be decided by considering the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 16. Moreover, as pointed out in the case of Sugauli Sugar Works (P) Ltd. (supra), vide the last five lines of the paragraph-6 of the judgement, the question whether the liability is actually barred by limitation is not a matter which can be decided by considering the assessee's case alone but has to be decided only if the creditor is before the concerned authority. In the absence of the creditor, it is not possible for the authority to come to a conclusion that the debt is barred and has become unenforceable. There may be circumstances which may enable the creditor to come with a proceeding for enforcement of the debt even after expiry of the normal period of limitation as provided in the Limitation Act. (iii) In the case of CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicable to the facts of the present case is in line with the principles enunciated in the above decision. The Tribunal, therefore, committed no legal error so as to give rise to any question of law warranting interference by this court. We are in agreement with the view of the Tribunal. Section 41(1) of the Act as discussed in the above three decisions would apply in a case where there has been remission or cessation of liability during the year under consideration subject to the conditions contained in the statute being fulfilled. Additionally, such cessation or remission has to be during the previous year relevant to the assessment year under consideration. In the present case, both elements are missing. There was nothing on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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