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| The Tax Publishers2020 TaxPub(DT) 1555 (Mad-HC) INCOME TAX ACT, 1961
Section 41
Where addition was made under section 41 for amount of stale drafts not claimed for more than three years and claim for which had become barred by limitation, the addition was not sustainable because liability of assessee-bank to pay back amounts to customers in respect of such stale demand drafts and pay orders did not cease in law.
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Business addition under section 41 - Remission and cessation of trading liability - Amount of stale drafts not claimed for more than three years and claim for which had become barred by limitation - Liability of assessee-bank whether ceased in law for such demand drafts
Issue arose as regards addition of amount of stale drafts not claimed for more than three years and claim for which had become barred by limitation. Held: As decided in Raddi Sahakara Bank Niyamitha Bank road Dharwad [(2017) 395 ITR 652 (Karnataka) : 2017 TaxPub(DT) 1922 (Karn-HC)], addition cannot be made under section 41(1), since liability of assessee Bank to pay back amounts to the customers in respect of such stale Demand Drafts and Pay Orders does not cease in law.
Followed:CIT v. The Raddi Sahakara Bank Niyamitha Bank Road (2017) 395 ITR 652 (Karnataka) : 2017 TaxPub(DT) 1922 (Karn-HC); CIT v. Karnataka Vikas Grameen Bank [I.T.A. No. 100014 of 2014 and connected case, decided on 14-12-2015] : 2016 TaxPub(DT) 0817 (Karn-HC)
REFERRED : CIT v. TV Sundaram Iyengar and Sons Ltd. (1996) 222 ITR 344 (SC) : 1996 TaxPub(DT) 1245 (SC)
FAVOUR : In assessee's favour
A.Y. :
IN THE MADRAS HIGH COURT
VINEET KOTHARI & R. SURESH KUMAR, JJ.
CIT v. City Union Bank Ltd.
Tax Case (Appeal) No. 522 of 2010
2 March, 2020
Appellant by: J. Narayanasamy Senior Standing Counsel
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