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| The Tax Publishers2019 TaxPub(DT) 1625 (Mum-Trib) INCOME TAX ACT, 1961
Section 41(1)
Merely because certain creditors were outstanding for more than three years no addition could be make under section 41(1) without any cogent reason and further enquiry in this regard.
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Business income - Profits chargeable to tax under section 41(1) - Remission or cessation of trading liability - Creditors outstanding for more than three years
AO noticed that some of the creditors were outstanding for more than three years and there was no movement in their accounts. He took the view that there was not much chance for assessee to make payment in this regard and accordingly AO made addition under section 41(1).Held: No case had been made out that AO had made any enquiry and found that impugned creditors were not payable. Just because creditors were outstanding for more than three years, there is no universal rule that the balance has to date back under section 41(1). Accordingly, addition made under section 41(1) without any cogent reason was deleted.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2010-11
INCOME TAX ACT, 1961
Section 14A
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