No Cessation of Liability U/s 41(1) – Long Outstanding Foreign Creditors Cannot Be Taxed Without Waiver or Write-Back

Max Media Technologies Private Limited Vs ITO (ITAT Mumbai) ITAT Mumbai deleted addition of ₹43.79 lakh made u/s 41(1) holding that mere long-standing unpaid trade liabilities do not amount to cessation of liability. Assessee had outstanding balances towards foreign suppliers arising from earlier imports, which continued to be reflected in books and were supported by ledger confirmations, invoices and import documents. There was no waiver, write-back or benefit obtained by assessee during the relevant year. Tribunal observed that provisions of s.41(1) apply only where there is actual remissi...