1973 (2) TMI 35

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..... assessee and against the department - Income-Tax Reference No. 37 of 1971 - - - Dated:- 2-2-1973 - Judge(s) : K. SADASIVAN., P. GOVINDAN NAIR. JUDGMENT The judgment of the court was delivered by GOVINDAN NAIR J.- The Income-tax Appellate Tribunal, Cochin Bench, has referred the following questions for our decision : "1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the amounts of Rs. 16,513 is not assessable under section 41(1) of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, there is any material for the Tribunal to hold that there was no remission or cessation of liability in respect of the sum of Rs. 6,725 ? " .....

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..... plicable or attracted because, as we read it, the section would apply only when the deduction had been made in the computation of the income of the same assessee who is sought to be taxed by applying the section. The view taken by the Tribunal in this regard is, therefore, unassailable. The question in regard to the sum of Rs. 6,725 is whether there had been a cessation of liability. This is more difficult to deal with. It is said that there has been such a cessation of liability because the debts had become irrecoverable due to the provisions in the law of limitations and further because the assessee himself treated these debts as irrecoverable, decided that it was unnecessary to show the amounts as due to creditors and then proceeded to .....

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..... require something tangible and far more specific than the material that was available before the taxing authority in this case to show that there was an admission that the liability itself had ceased to exist. We cannot spell out such an admission from the fact that the debtor realised that the amount was not recoverable and that he need not make any provision for its payment in his account. The very first step in the argument of the department, therefore, cannot stand and there is, therefore, no need to consider the question whether there was any evidence that the admission was mistaken or not. We do not think that the decisions relied on by counsel for the revenue in Commissioner of Income-tax v. Gangadhar Banerjee and Co. (Private) Ltd. .....

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