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The Tax PublishersITA Nos. 1100, 2905/Ahd/2014, ITA Nos. 1963, 1610/Ahd/2016
2020 TaxPub(DT) 5293 (Sur-Trib)INCOME TAX ACT, 1961
Section 41(1)
Since assessee had not written back liability in respect of various creditors therefore, section 41(1) could not be invoked and, therefore, no addition was called for.
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Business income under section 41(1) - Remission or cessation of trading liability - Liability not written off -
AO required assessee to furnish confirmation in respect of various creditors outstanding for more than 3 years. As assessee failed to file confirmation for verification and to explain creditors with supporting evidence, AO added the same to income of assessee under section 41(1). Held: As per Explanation (1) inserted in section 41(1) by Finance (No. 2) Act, 1996 with effect from 1-4-1997, if assessee has written back liability then it would amount to remission or cessation of liability for the purpose of invoking section 41(1). In the instant case, assessee had not written back liability in question, therefore, section 41(1) could not be invoked and, therefore, no addition was called for.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2010-11 to 2012-13
INCOME TAX ACT, 1961
Section 80-IA
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