No addition can be made u/s 41(1)(a) for the interest liability converted into the share capital as there is no cessation of liability

Tamil Nadu State Transport Corporation (Kum Div I) Limited Vs JCIT (ITAT Chennai) – With regard to deemed profits and gains u/s 41(1)(a), it was argued that the accumulated interest payable to Government which was converted as share capital during the year was treated as deemed profit u/s 41(1)(a). In fact, it was interest accrued from 1995-96 to 31.10.2000. The ld. CIT(A) has confirmed this addition on the ground that it is a clear case of cessation of liability. But it was fairly conceded by both sides that this issue stands covere

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