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Section 41(1) Addition Not Automatic on Creditor’s Write-Off
Case Law Details
- Case Name
- Associated Projects Infra Vs DCIT (ITAT Hyderabad)
- Appeal Number
- Only available for paid members
- Date of Judgement/Order
- Only available for paid members
- Related Assessment Year
- 2020-21
- Courts
- All ITAT, ITAT Hyderabad
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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) appli...
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