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TMI Blog1973 (2) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... there is any material for the Tribunal to hold that there was no remission or cessation of liability in respect of the sum of Rs. 6,725 ? " This is a reference at the instance of the department. The Tribunal held that out of the amount of Rs. 16,513 a sum of Rs. 9,788 cannot be treated as income under section 41(1) of the Income-tax Act, 1961, because that amount was not allowed to the assessee as a deduction, and, therefore, section 41 was not attracted. Regarding the sum of Rs. 6,725 the Tribunal held that there was no cessation of any liability and so section 41 was inapplicable. The sum of Rs. 16,513 mentioned in question No. 1 is part of the amount of Rs. 29,191.27 which is the sum total of two credit entries made on March 31, 1967, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mself treated these debts as irrecoverable, decided that it was unnecessary to show the amounts as due to creditors and then proceeded to divide the amounts and included them in the capital asset of the partners of the firm and made credit entries of these amounts in their individual accounts. The question is whether the lapse of time and the debts getting barred in consequence, and the attitude of the assessee that he would not pay these amounts, and his refusal to show these amounts in his account books as due, and further treating these amounts as belonging to himself would be sufficient to say there has been " a cessation of liability ". Counsel for the revenue contended that this amounts to an admission on the part of the assessee that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... think that the decisions relied on by counsel for the revenue in Commissioner of Income-tax v. Gangadhar Banerjee and Co. (Private) Ltd. and Associated Banking Corporation of India Ltd. v. Commissioner of Income-tax, have any application to the facts of this case. The decision of the Andhra Pradesh High Court in Semakurti Somanna v. Vankadari Subbarao has also no application. The relevant decision seems to be that of the Supreme Court in Bombay Dyeing & Manufacturing Co. Ltd. v. State of Bombay referred to by the Tribunal for the proposition that under the law a debt notwithstanding that its recovery had been barred by limitation continued to exist. The recognition of the fact that the recovery of a debt is barred by limitation does not im ..... X X X X Extracts X X X X X X X X Extracts X X X X
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