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TMI Blog2015 (8) TMI 1487X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction pursuant to State Government s Ordinance which was later enacted into Act, provision for such liability cannot be taxed by invoking the provision of Sec. 41(1) of the Act on the mere ground that amount allowed was returned back to profit and loss account, unless such liability was remitted or seized to exists. In the present case, the liability very much in existence in on account of sundry credit and this is trading liability and once it is not seize to exist, or remitted, the mere non-existence of the parties cannot be added as an income of the assessee. Accordingly, this appeal of assessee is allowed on merits. Set off of sundry creditors and carried forward from earlier year, as the appeal for AY 2000-01 has already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal assessment order reads as under:- Sl. No. Name of the Sundry Creditors Amount outstanding as on 31.03.2000 (Rs) 1. B.K. Enterprises 35,658.20 2. Blue Star Engineering Co. 44,625.00 3. Bhowmick Engineering Co. 97,062.00 4. Chatterjee Engineering Co 71,423.00 5. Das Engineering 63,498.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A) also confirmed the action of AO. Aggrieved, now assessee is in second appeal before us. 4. We find that assessee has not written off the sundry creditors and these are existing liabilities outstanding in the books of accounts of the assessee. Once the liabilities are outstanding whether in such cases, provision of Section 41(1) of the Act can be invoked. From the perusal of Sec. 41(1) of the Act, we are of the view that the requirement of obtain a benefit can be said to have satisfied if the cash is actually received or adjustment entry is made. The provision of Sec. 41(1) comes into operation where the assessee has incurred a trading liability and trading liability has been allowed as a deduction in any earlier year, and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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