2009 (12) TMI 541

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..... ors - aditions under section 41(1) of the Act – Held that: - there is cessation of liability in respect of interest credited to the account of the creditors and so much so, it was rightly found by the Tribunal as income assessable under section 41(1) of the Income-tax Act - creditors ceased to have any claim against the assessee after the credit entries are transferred to the capital accounts of t .....

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..... tives, gifted these amounts to the partners. Even though the Assessing Officer by applying section 41(1) assessed the interest portion of the credit entry as income, the Commissioner of Income-tax (Appeals), in the course of hearing the appeal, enhanced the assessment by treating the entire credit entries as income assessable under section 41(1) of the Act. However, the Tribunal, on second appeal, .....

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..... ers. On such transfer, the assessee has ceased to be liable for the interest liability which was claimed as deduction in the previous years. Therefore, in our view, there is cessation of liability in respect of interest credited to the account of the creditors and so much so, it was rightly found by the Tribunal as income assessable under section 41(1) of the Income-tax Act. 4. We, therefore, di .....

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