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“Section 41(1)”

Section References (mined)Section 41Section 41(1)883 judgments

The decision most relied on for Section 41(1) is Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT (227 ITR 172), cited in 621 judgments on BharatTax.

Leading authorities on Section 41(1)

Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT
227 ITR 172 · 1997 · Supreme Court
621
citing judgments

Interest income earned on deposits, particularly before the commencement of business operations or as a requirement for business licensing, is taxable as "income from other sources" under Section 56, and cannot be treated as business income or set off against interest on borrowed funds.

CIT v. T.V. Sundaram Iyengar & Sons Ltd.
222 ITR 344 · 1996 · Supreme Court
223
citing judgments

Unclaimed deposits received in the course of trading transactions and sundry credit balances written back are taxable as business income under Section 41(1) of the Income-tax Act, 1961, as they constitute a cessation of trading liability.

CIT v. Indo Nippon Chemicals Co. Ltd.
261 ITR 275 · 2003 · Supreme Court
204
citing judgments

A liability recognized in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India (ICAI) is an allowable expense for income tax purposes.

CIT v. Sugauli Sugar Works (P) Ltd.
236 ITR 518 · 1999 · Supreme Court
203
citing judgments

For the purpose of Section 41(1) of the Income-tax Act, a liability is considered to have ceased only when the creditor actively releases or writes off the amount, or when the liability ceases to exist in the assessee's books; mere expiry of the limitation period for recovery does not constitute cessation of liability.

CIT v. Mahindra & Mahindra Ltd.
404 ITR 1 · 2018 · Supreme Court
164
citing judgments

The waiver of a loan taken for acquiring capital assets is considered a capital receipt and is not taxable as income under Section 28(iv) of the Income Tax Act. The ruling distinguishes between the waiver of trading liabilities and capital liabilities for tax purposes.

Mahindra & Mahindra Ltd. v. CIT
261 ITR 501 · 2003 · High Court
147
citing judgments

Section 41(1) of the Income-tax Act cannot be invoked if the assessee has not been granted a deduction for the relevant liability in earlier years.

Prakash Cotton Mills Pvt. Ltd. v. CIT
201 ITR 684 · 1993 · Supreme Court
133
citing judgments

Compensatory interest or damages paid for a breach of contract, arising in the normal course of business, are allowable as a deduction under section 37(1) as wholly and exclusively incurred for business purposes. This principle extends to indirect taxes paid in the course of business, which are admissible as business expenditure.

CIT v. Oswal Agro Mills Ltd.
341 ITR 467 · 2012 · High Court
108
citing judgments

The Legislature abolished terminal depreciation under section 32(1)(iii) and the taxing of balancing charge under section 41(2), replacing these provisions with the requirement to reduce sale proceeds of depreciable assets from the block of assets.

Judgments citing Section 41(1)

Overseas Infrastructure Alliance (India) Private Limtied, Mumbai vs. Assistant Commissioner of Income Tax Central Circle 6(2), Mumbai

In the result, appeal by the assessee is allowed

ITA 4044/MUM/2025[2021-22]Status: DisposedITAT Mumbai20 Feb 2026AY 2021-22

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

Accordingly, ground no.1 raised by the Revenue is dismissed. 8.6. Ground No. 2 is in respect of not invoking the provisions of Section 41(1) of the Act in respect of outstanding liabilities. Assessee had entered into an agreement with Mashkour Sugar Factory Company ("Mashkour") in the year ... reversed the provisions in AY 2024-25 which have been taxed u/s. 41(1), during the year under consideration. Therefore, invoking section 41(1)(a) and holding that the liability had ceased during the current year results in double taxation. Overseas Infrastructure Alliance (India

Overseas Infrastructure Alliance (India) Private Limtied, Mumbai vs. Assistant Commissioner of Income Tax Central Circle 6(2), Mumbai

In the result, appeal by the assessee is allowed

ITA 4043/MUM/2025[2019-20]Status: DisposedITAT Mumbai20 Feb 2026AY 2019-20

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

Accordingly, ground no.1 raised by the Revenue is dismissed. 8.6. Ground No. 2 is in respect of not invoking the provisions of Section 41(1) of the Act in respect of outstanding liabilities. Assessee had entered into an agreement with Mashkour Sugar Factory Company ("Mashkour") in the year ... reversed the provisions in AY 2024-25 which have been taxed u/s. 41(1), during the year under consideration. Therefore, invoking section 41(1)(a) and holding that the liability had ceased during the current year results in double taxation. Overseas Infrastructure Alliance (India

ACIT CC 6(2), Mumbai vs. Overseas Infrastructure Alliance (India) Private Limited, Mumbai

In the result, appeal by the assessee is allowed

ITA 3998/MUM/2025[2017-18]Status: DisposedITAT Mumbai20 Feb 2026AY 2017-18

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

Accordingly, ground no.1 raised by the Revenue is dismissed. 8.6. Ground No. 2 is in respect of not invoking the provisions of Section 41(1) of the Act in respect of outstanding liabilities. Assessee had entered into an agreement with Mashkour Sugar Factory Company ("Mashkour") in the year ... reversed the provisions in AY 2024-25 which have been taxed u/s. 41(1), during the year under consideration. Therefore, invoking section 41(1)(a) and holding that the liability had ceased during the current year results in double taxation. Overseas Infrastructure Alliance (India

ACIT CC 6(2), Mumbai vs. Overseas Infrastructure Alliance (India) Private Limited, Mumbai

ITA 3996/MUM/2025[2015-16]Status: DisposedITAT Mumbai20 Feb 2026AY 2015-16

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT

ACIT, CC-6(2), Mumbai vs. Overseas Infrastructure Alliance (India) Private Limited, Mumbai

In the result, appeal by the assessee is allowed

ITA 3995/MUM/2025[2011-12]Status: DisposedITAT Mumbai20 Feb 2026AY 2011-12

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Harsh Kothari and Shri Ronak Vasavada, CAsFor Respondent: Shri R. A. Dhyani, CIT DR and Shri Virabhadra S. Mahajan, Sr. DR
Section 1

Accordingly, ground no.1 raised by the Revenue is dismissed. 8.6. Ground No. 2 is in respect of not invoking the provisions of Section 41(1) of the Act in respect of outstanding liabilities. Assessee had entered into an agreement with Mashkour Sugar Factory Company ("Mashkour") in the year ... reversed the provisions in AY 2024-25 which have been taxed u/s. 41(1), during the year under consideration. Therefore, invoking section 41(1)(a) and holding that the liability had ceased during the current year results in double taxation. Overseas Infrastructure Alliance (India

M/S A-One Enterprises, Dehradun vs. Income Tax Officer, Dehradun

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 209/DDN/2025[2017-18]Status: DisposedITAT Dehradun18 Feb 2026AY 2017-18

Bench: Shri Yogesh Kumar U.S. & Shri Manish Agarwalm/S A-One Enterprises, Income Tax Officer, 135/61 East Patel Nagar, Dehradun. Dehradun, Uttarakhand-248001. Vs. Pan-Aanfa5222D (Appellant) (Respondent) Assessee By Shri Saurabh Gupta, Ca Department By Shri A. S. Rana, Sr. Dr Date Of Hearing 11.12.2025 Date Of Pronouncement 18.02.2026 O R D E R Per Manish Agarwal, Am: This Appeal Is Filed By The Assessee Against The Order Of The Ld. Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [‘Ld. Cit(A)’ In Short], Dated 25.08.2025 In Appeal No. Cit(A)/Dehradun/10654/2019-20 Arising Out Of The Assessment Order Passed U/S 143(3) Of The Act, 1961 (The Act’ In Short) Dated 16.12.2029 For Assessment Year 2017-18. 2. Brief Facts Of The Case Are That Assessee Had Filed Its Return Of Income Declaring Total Income At Rs.3,08,939/-. The Case Was Selected For Scrutiny & Assessment Was Completed Vide Order Dated 16.12.2019 At A Total Income Of Rs.51,79,869/- By Making Additions Of Rs.48,49,500/- U/S 68 Of The Act & Rs.21,430/- U/S 41(1) Of The Act. A-One Enterprises Vs. Ito 3. Aggrieved By The Said Order, The Assessee Preferred An Appeal Before The Ld. Cit(A) Who Partly Allowed The Appeal By Allowing The Additions Of Rs.4,49,500/- After Verification By The Ao & Confirmed The Remaining Additions Of Rs. 44.00 Lacs Made U/S 68 Of The Act & Rs. 21,430/- Towards Bogus Liability.

Section 143(3)Section 41(1)Section 68

IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH ‘DB’: DEHRADUN BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI MANISH

Prashant Jugalkishore Rathi, Akola vs. Income Tax Officer, Ward-3, Akola

In the result, the grounds of appeal raised by the assessee are allowed for statistical purposes

ITA 29/NAG/2024[2013-14]Status: DisposedITAT Nagpur17 Feb 2026AY 2013-14

Bench: Shri Pawan Singh & Shri Khettra Mohan Roy(Physical Hearing) Prashant Jugalkishore Rathi Ito, Ward–3, Akola Laxmi Nagar Shrinath Apartment, Vs Aayakar Bhawan, Murtizapur Gaurakshan Road, Road, Maharashtra – 444107. Maharashtra – 444004. [Pan: Aocpr1040K] Appellant / Assessee Respondent / Revenue Assessee By Mrs. Shikha Loya, Ca Revenue By Shri Pankaj Kumar, Cit–Dr Date Of Hearing 17.02.2026 Date Of Pronouncement 17.02.2026 Order Under Section 254(1) Of Income Tax Act Per Pawan Singh:

Section 144Section 249Section 249(4)(b)Section 250(6)Section 254(1)Section 41(1)

Assessing Officer (AO) under Section 144 r.w.s 147 of the Act on 29.09.2021 by making addition of Rs. 4,65,23,793/- under section 41(1) on account of loan written off/ remission of liability by Akola Urban Cooperative Bank. The ld. CIT(A) dismissed the appeal in limine

East Delhi Waste Processing Company Private Limited, Delhi vs. DCIT Circle 7(1), Delhi

In the result, the appeal of the assessee is partly allowed

ITA 3463/DEL/2025[2021-22]Status: DisposedITAT Delhi16 Feb 2026AY 2021-22

Bench: Shri Mahavir Singh & Shri M. Balaganesheast Delhi Waste Processing Vs. Dcit, Company Pvt. Ltd, Circle-7(1), 221, Okhla Industrial Area, Delhi Phase-Iii, Okhla Industrial Estate, South Delhi, Delhi (Appellant) (Respondent) Pan: Aaaco7539D

For Appellant: Shri Vishal Kalra, AdvFor Respondent: Shri Pravin Rawal, CIT DR
Section 154Section 241(2)Section 242(2)Section 79

same represent capital creditors for which no deduction has been claimed by the assessee in the earlier years. Hence, the provisions of Section 41(1) of the Act per se could not be made applicable for the same. Hence, no addition could be made u/s 41(1

DCIT Circle 2(3)(1), Mumbai vs. Ndx P2P Private Limited, Mumbai

In the result, the appeal of the Revenue is dismissed

ITA 6490/MUM/2025[2022-23]Status: DisposedITAT Mumbai10 Feb 2026AY 2022-23

Bench: Shri Om Prakash Kant () & Shri Rahul Chaudhary ()

Section 142(1)Section 143(2)Section 37(1)Section 41(1)Section 44A

ledger account and failed to establish, to the AO's satisfaction. The Assessing Officer also made an addition of ₹77,60,711/- under section 41(1) of the Act. 3. In appeal before the Ld. CIT(A), the assessee contended that all requisite details had been furnished during assessment proceedings

Max Media Technologies Private Limited, Mumbai vs. ITO Ward 12(3)(1), Mumbai

In the result, the appeal filed by the assessee stands allowed

ITA 4922/MUM/2025[2013-14]Status: DisposedITAT Mumbai10 Feb 2026AY 2013-14

Bench: Smt. Beena Pillai ()

Section 142(1)Section 143(2)Section 41(1)Section 419

circumstances of the case and in law, the CIT(A) erred in confirming the addition of 743,79,941/- under section 41(1) of the Act by holding that no evidence of any dispute with the foreign creditors has been submitted, despite of the fact that the appellant filed ledger ... provision under the Income Tax Act that mandates automatic cessation of liability due to regulatory non- compliance, which is beyond the scope of section 41(1). The default of RBI and FEMA compliances regarding non-payment is termed as default under the respective Law and Regulation under RBI guidelines

Hassan Power Supply Campany Limited, Bengaluru vs. DCIT, Central Circle-2(1), Bangalore

In the result, Appeal filed by the Assessee is partly allowed

ITA 2181/BANG/2025[2017-18]Status: DisposedITAT Bangalore06 Feb 2026AY 2017-18

Bench: Shri Prashant Maharishi, Vice – & Shri Keshav Dubeyassessment Year : 2017-18 M/S. Hassan Power Supply Company Ltd., The Deputy Commissioner No. 17, Sankey Road, Of Income Tax, Bengaluru, Central Circle-2(1), Vs. Karnataka – 560 020. Bengaluru. Pan: Aaach4163J Appellant Respondent

For Appellant: Shri H. Siva prasad Reddy, ITP
Section 132Section 143(2)Section 143(3)Section 41Section 41(1)

Assessing Officer. Therefore, the Assessee is in Appeal. 7. The Ld. Authorized Representative submitted that there is no application of section 41(1) of the Act as the outstanding creditors are neither written back nor ceased to exist. He further referred to the decision of several High Courts wherein ... unpaid, there is no evidence of recovery being asked by those parties from the Assessee, pertaining to related parties. According to provisions of section 41(1) of the Act, we find that the income is chargeable to tax only when there is a remission or cessation of liability. Here

ACIT, New Delhi vs. Sh. Sanjeev Malhotra, New Delhi

Appeal is allowed for statistical purposes

ITA 2528/DEL/2010[2005-06]Status: HeardITAT Delhi04 Feb 2026AY 2005-06

Bench: Shri Satbeer Singh Godara & Shri Naveen Chandraassessment Year: 2005-06 Acit, Vs. Sh. Sanjeev Malhotra, Circle-22(1), 64, Hemkunt Colony, G.K.-1, New Delhi New Delhi Pan: Abdpm9549C (Appellant) (Respondent) Assessee By Sh. Salil Kapoor, Adv. Sh. Sumit Lal Chandani, Adv. Ms. Somya Jain, Adv. Department By Ms. Monika Singh, Cit(Dr)

Section 144Section 41(1)Section 68

impugned order dated 03.03.2010 has deleted the same in his lower appellate discussion that neither it was an instance attracting section 41(1) cessation of liability addition nor that of bogus sundry creditors; as the case may be, to decide the issue in the assessee’s favour. The Revenue then ... notice that the order of the Tribunal, is devoid of details and simply records that the CIT (Appeals) had examined the provisions of Section 41(1) and had not made any addition in the said account. It does not discuss any facet as such. The quantum/amount itself is substantial

Deputy Commissioner of Income Tax, Central Circle-1, Rajkot vs. Classic Network Pvt. Ltd., Rajkot

In the result, appeal filed by the assessee in ITA No

ITA 287/RJT/2024[2016-17]Status: DisposedITAT Rajkot30 Jan 2026AY 2016-17

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha

account of unexplained expenditure under section 69C of the Act and on account of profit chargeable to tax as per section 41(1) of the Act. Page 6of 44 ITA No. 286 to 298, 177 & 178/Rjt/2022 & 2024 Classic Network Pvt. Ltd. (Group Case) 6. Aggrieved by the order ... impounded digital data Page no. 55 of print outs taken from the 900000 Profits chargeable to tax as per impounded digital data Section 41(1) Total 17,39,72,425 30. In response to the above show cause notice, the assessee has submitted the same details and documents again. However

Deputy Commissioner of Income Tax, Central Circle-1, Rajkot vs. Classic Network Pvt. Ltd., Rjakot

In the result, appeal filed by the assessee in ITA No

ITA 286/RJT/2024[2014-15]Status: DisposedITAT Rajkot30 Jan 2026AY 2014-15

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha

account of unexplained expenditure under section 69C of the Act and on account of profit chargeable to tax as per section 41(1) of the Act. Page 6of 44 ITA No. 286 to 298, 177 & 178/Rjt/2022 & 2024 Classic Network Pvt. Ltd. (Group Case) 6. Aggrieved by the order ... impounded digital data Page no. 55 of print outs taken from the 900000 Profits chargeable to tax as per impounded digital data Section 41(1) Total 17,39,72,425 30. In response to the above show cause notice, the assessee has submitted the same details and documents again. However

Classic Network Private Limited, Rajkot vs. Deputy Commissioner of Income Tax, Central -1, Rajkot

In the result, appeal filed by the assessee in ITA No

ITA 178/RJT/2024[2017-18]Status: DisposedITAT Rajkot30 Jan 2026AY 2017-18

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha

account of unexplained expenditure under section 69C of the Act and on account of profit chargeable to tax as per section 41(1) of the Act. Page 6of 44 ITA No. 286 to 298, 177 & 178/Rjt/2022 & 2024 Classic Network Pvt. Ltd. (Group Case) 6. Aggrieved by the order ... impounded digital data Page no. 55 of print outs taken from the 900000 Profits chargeable to tax as per impounded digital data Section 41(1) Total 17,39,72,425 30. In response to the above show cause notice, the assessee has submitted the same details and documents again. However

Classic Network Private Limited, Rajkot vs. Deputy Commissioner of Income Tax, Central - 1, Rajkot

In the result, appeal filed by the assessee in ITA No

ITA 177/RJT/2024[2016-17]Status: DisposedITAT Rajkot30 Jan 2026AY 2016-17

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha

account of unexplained expenditure under section 69C of the Act and on account of profit chargeable to tax as per section 41(1) of the Act. Page 6of 44 ITA No. 286 to 298, 177 & 178/Rjt/2022 & 2024 Classic Network Pvt. Ltd. (Group Case) 6. Aggrieved by the order ... impounded digital data Page no. 55 of print outs taken from the 900000 Profits chargeable to tax as per impounded digital data Section 41(1) Total 17,39,72,425 30. In response to the above show cause notice, the assessee has submitted the same details and documents again. However

Classic Network Private Limited, Rajkot vs. The Deputy Commissioner of Income Tax, Central -1 Rajkot, Rajkot

In the result, appeal filed by the assessee in ITA No

ITA 176/RJT/2024[2014-15]Status: DisposedITAT Rajkot30 Jan 2026AY 2014-15

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha

account of unexplained expenditure under section 69C of the Act and on account of profit chargeable to tax as per section 41(1) of the Act. Page 6of 44 ITA No. 286 to 298, 177 & 178/Rjt/2022 & 2024 Classic Network Pvt. Ltd. (Group Case) 6. Aggrieved by the order ... impounded digital data Page no. 55 of print outs taken from the 900000 Profits chargeable to tax as per impounded digital data Section 41(1) Total 17,39,72,425 30. In response to the above show cause notice, the assessee has submitted the same details and documents again. However

M/S. Classic Network Limited, Rajkot-Gujarat vs. The Deputy Commissioner of Income Tax, Circle-1, Rajkot-Gujarat

In the result, appeal filed by the assessee in ITA No

ITA 291/RJT/2022[2019-20]Status: DisposedITAT Rajkot30 Jan 2026AY 2019-20

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha

account of unexplained expenditure under section 69C of the Act and on account of profit chargeable to tax as per section 41(1) of the Act. Page 6of 44 ITA No. 286 to 298, 177 & 178/Rjt/2022 & 2024 Classic Network Pvt. Ltd. (Group Case) 6. Aggrieved by the order ... impounded digital data Page no. 55 of print outs taken from the 900000 Profits chargeable to tax as per impounded digital data Section 41(1) Total 17,39,72,425 30. In response to the above show cause notice, the assessee has submitted the same details and documents again. However

M/S. Classic Network Limited, Rajkot-Gujarat vs. The Deputy Commissioner of Income Tax, Circle-1, Rajkot-Gujarat

In the result, appeal filed by the assessee in ITA No

ITA 290/RJT/2022[2018-19]Status: DisposedITAT Rajkot30 Jan 2026AY 2018-19

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha

account of unexplained expenditure under section 69C of the Act and on account of profit chargeable to tax as per section 41(1) of the Act. Page 6of 44 ITA No. 286 to 298, 177 & 178/Rjt/2022 & 2024 Classic Network Pvt. Ltd. (Group Case) 6. Aggrieved by the order ... impounded digital data Page no. 55 of print outs taken from the 900000 Profits chargeable to tax as per impounded digital data Section 41(1) Total 17,39,72,425 30. In response to the above show cause notice, the assessee has submitted the same details and documents again. However

M/S. Classic Network Limited, Rajkot-Gujarat vs. The Deputy Commissioner of Income Tax, Circle-1, Rajkot-Gujarat

In the result, appeal filed by the assessee in ITA No

ITA 289/RJT/2022[2015-16]Status: DisposedITAT Rajkot30 Jan 2026AY 2015-16

Bench: Dr. Arjun Lal Saini & Dr. Dinesh Mohan Sinha

account of unexplained expenditure under section 69C of the Act and on account of profit chargeable to tax as per section 41(1) of the Act. Page 6of 44 ITA No. 286 to 298, 177 & 178/Rjt/2022 & 2024 Classic Network Pvt. Ltd. (Group Case) 6. Aggrieved by the order ... impounded digital data Page no. 55 of print outs taken from the 900000 Profits chargeable to tax as per impounded digital data Section 41(1) Total 17,39,72,425 30. In response to the above show cause notice, the assessee has submitted the same details and documents again. However