Section 41(1) Addition Not Automatic on Creditor’s Write-Off

Associated Projects Infra Vs DCIT (ITAT Hyderabad) Section 41(1) Addition Not Automatic: Creditor’s Write-Off Requires Verification The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) held that an addition under section 41(1) cannot be sustained merely because a creditor has written off an amount as bad debt in its books. In the present case, the Assessing Officer treated the amount of ₹56.23 lakh as income of the assessee on the premise that the creditor’s unilateral write-off resulted in cessation of liability. The Tribunal observed that section 41(1) applies only where a l...