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| The Tax Publishers2020 TaxPub(DT) 3374 (Guj-HC) : (2020) 273 TAXMAN 0430 INCOME TAX ACT, 1961
Section 41(1)
Once assessee had continued to show admitted amounts as liabilities in its balance sheet and such amount was not written back in Profit and Loss account same could not be treated as a case of cessation of liabilities merely because liabilities were outstanding for more than three years and, therefore, section 41(1) could not invoked be so as to make addition.
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Business income under section 41(1) - Remission or cessation of trading liability - Liability outstanding for more than three years -
Question arose for consideration was whether liability outstanding for more than three years could be automatically treated as ceased to exist so as to make addition under section 41(1). Held: Once assessee had continued to show admitted amounts as liabilities in its balance sheet and such amount was not written back in Profit and Loss account. The same could not be treated as a case of cessation of liabilities merely because liabilities were outstanding for more than three years and, therefore, section 41(1) could not invoked be so as to make addition.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
IN THE GUJARAT HIGH COURT
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