Waiver of Loan Not Cessation of Trading Liability under Section 41(1): ITAT Delhi

Luxor Writing Instruments (P) Ltd Vs DCIT (ITAT Delhi) Introduction: In a landmark judgment, the Income Tax Appellate Tribunal (ITAT) Delhi ruled in favor of Luxor Writing Instruments (P) Ltd against the Deputy Commissioner of Income Tax (DCIT). The ruling centers around the treatment of waived loans under Section 41(1) of the Income Tax Act. The tribunal held that the waiver of a loan does not equate to cessation of trading liability, thereby instructing the Assessing Officer (AO) to delete the impugned addition of Rs.33,485,700. Background: The grievance initially arose when the Commission...