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TMI Blog2022 (4) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed by the assessee relating to the impugned creditors in view of the said facts. Having said so, there arises no question of invoking the provision of section 41(1) of the Act in the present case at all since it fails to fulfill the basic criteria enunciated in the said section. Therefore, for this reason alone, the addition made u/s. 41(1) by the Assessing Officer deserves to be set aside and order of the Ld.CIT(A) be upheld - we uphold the order of the Ld. CIT(A) deleting the addition made to the income of the assessee u/s 41(1) - Decided in favour of assessee. - ITA No. 2256/Ahd/2017 (Assessment Year 2014-15) - - - Dated:- 2-12-2021 - Shri Rajpal Yadav, Vice President And Ms. Annapurna Gupta, Accountant Member Revenue by: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability relating to the said creditors had ceased to exist for the reason that the balances were old, confirmed copies of ledger accounts of the same were not furnished by the assessee nor the details of periods to which the balances related. Accordingly he invoked the provisions of section 41(1) of the Act and treated the same as income of the assessee. 4. The matter was carried in appeal before the ld. CIT(A) who deleted the addition noting that the assessee had not written back the said liability in its books of account and had admitted to the liability subsisting, accordingly the ld. CIT(A) held that assessee had not received any benefit by way of cessation or remission of liability and therefore the provisions u/s. 41(1) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue before us. Section 41(1) is reproduced hereunder:- 41. (1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the first-mentioned person) and subsequently during any previous year,- (a) the first-mentioned person has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding liability is remitted or ceases to exist. 9. So being the position of law vis a vis deeming income as per section 41(1) of the Act, we find that in the facts of the present case, the assessee does not fulfill the basic criteria of having earlier claimed any expenditure or allowance vis- -vis the sundry creditors of ₹ 1.92 crores added back to its income as per the said section. 10. The submission by the assessee before the Assessing Officer, reiterated before the ld. CIT(A) also and which is reproduced at para 4 of the assessment order and para 2 of CIT(A) s order, is to the effect that the expenditure relating to purchase of construction material, to which the impugned creditors relate, only resulted in work in progress in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umulated in work in progress account only. 12. The aforesaid facts were not disputed by the Ld. DR before us who also fairly admitted that no expenditure had been claimed by the assessee relating to the impugned creditors in view of the said facts. 13. Having said so, there arises no question of invoking the provision of section 41(1) of the Act in the present case at all since it fails to fulfill the basic criteria enunciated in the said section. Therefore, for this reason alone, the addition made u/s. 41(1) by the Assessing Officer deserves to be set aside and order of the Ld.CIT(A) be upheld. 14. Ld. D R relied upon various decisions before us to counter the findings of the Ld.CIT(A) which we find are of no consequence since we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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