PCIT Vs New World Synthetics Limited (Delhi High Court)
Delhi High Court held that there was no evidence of cessation of liability thus addition under section 41(1) of the Income Tax Act not justifiable. Accordingly, appeal filed by the revenue dismissed.
Facts- Present appeal by the Revenue u/s. 260 A of the Income Tax Act, 1961 assails the order dated 5th February, 2018 passed by the Income-tax Appellate Tribunal in the case of New World Synthetics Limited (respondent-assessee). The issue raised in the present appeal relates to addition of Rs.2,61,72,160/- made by the Assessing Officer u/s. 41(1) of the Act, which addition was deleted by the Commissioner of Income-tax (Appeals). The Tribunal vide impugned order has dismissed the second appeal filed by the Revenue holding that there was no evidence of cessation of liability.
Conclusion- In the present case there was no unilateral act by way of remission or cessation by the assessee, for the respondent-assessee had not written off the outstanding amount of Rs .2,61,72,160/- payable to M/s .P .T. Polysindo. This is also not a case where benefit in any form or in cash was received by the respondent-assessee. Hence, the first part of Clause (a) to Section 41(1) of the Act, would not apply.
