Section 41(1) cannot be invoked by revenue without showing that such liability had, in fact, ceased to exist

Pr. CIT Vs. Dharmendra Jagdishbhai Dubal (Gujarat High Court)

Therefore, to attract the provisions of sub-section (1) of section 41 of the Act, the revenue has to either show that such liability has in fact ceased to exist or that the assessee has written off such liability in his accounts. In the facts of the present case the assessee continues to acknowledge the liability in his accounts and there is nothing to show that on account of lapse of time the liability has ceased to exist. Under the circumstances, the Tribunal was wholly justified in holding that it can

Please become a Premium member. If you are already a Premium member, login here to access the full content.