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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)

Jsw Steels Ltd, Mumbai vs. DCIT CC 8(3), Mumbai

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

ITA 2116/MUM/2017[2012-13]Status: DisposedITAT Mumbai04 May 2023AY 2012-13

Bench: Shri Amarjit Singh & Shri Sandeep Singh Karhail

For Appellant: Shri Rishabh Shah a/wFor Respondent: Dr. Yogesh Kumar
Section 115JSection 142(1)Section 143(2)Section 143(3)Section 144C(1)Section 144C(13)Section 144C(5)Section 14ASection 801ASection 80I

Ground no.9 is decided accordingly. 37. The issue arising in ground no.10, raised in assessee‟s appeal, is pertaining to addition under section 41(1) of the Act on account of write off of project creditors. 38. The brief facts of the case pertaining to this issue are: During ... further submitted that the write-off is on capital account, not claimed as a deduction, and hence not covered by the provisions of section 41(1)/28(iv) of the Act. Thus, as per the assessee, the said amount is not taxable. The AO vide assessment order did not agree

The National Ex-Serviceman Co-Op Garage Ltd, Mumbai vs. ITO 17(2)(4), Mumbai

ITA 4611/MUM/2019[2015-16]Status: DisposedITAT Mumbai28 Apr 2023AY 2015-16

Bench: Shri Kuldip Singh & Shri Gagan Goyalassessment Year: 2015-16

For Appellant: NoneFor Respondent: Shri Chetan M. Kacha, D.R
Section 143(3)Section 271(1)Section 271(1)(c)Section 274Section 41(1)

failed to appreciate that the cessation of liability with respect to deposits received from customers cannot attract the provisions of section 41(1). 3. The Appellant carves leave to add, amend and or delete any of the above grounds of appeal.” 2. Briefly stated facts necessary for consideration and adjudication ... making addition of Rs.31,29,254/- on account of cessation of liability as per provisions of section 41(1) of the Act, penalty proceedings have been initiated under section 271(1)(c) of the Act for concealing the income. On failure of the assessee to file explanation to the notice

Shubham Developers, Surat vs. Assistant Commissioner of Income Tax, Central Circle-3, Surat

In the result, this appeal of assessee is allowed

ITA 268/SRT/2022[2018-19]Status: DisposedITAT Surat28 Apr 2023AY 2018-19

Bench: Shri Pawan Singh(Virtual Hearing) Shubham Developers, A.C.I.T., Fp No. 53-59, Tp 29, Vesugam, Vesu- Central Circle-3, Vs. Madalla, Vesu, Surat-395007. (Gujarat) Surat. Pan No. Acafs 6671 F Appellant/ Assessee Respondent/ Revenue

Section 133(6)Section 254(1)Section 41(1)

circumstances of the case, the ld. CIT(A) erred in confirming addition of Rs. 15,12,903/- made by the Assessing Officer under Section 41(1) of the Act on account of cessation and remission of liability from creditors. 2. The assessee craves leave to add, alter, amend and/or withdraw ... creditors against various works undertaking by them. The assessee also furnished copy of their bills, PAN and address. The assessee submitted that Section 41(1) is not applicable against the trading liability. Reply of assessee was not accepted by the Assessing Officer. The Assessing Officer held that reply of assessee

Assistant Commissioner of Income Tax 4(3)(1), Mumbai vs. M/S.Taurian Iron and Steel Company Private Limited, Mumbai

In the result, appeal of the Revenue is dismissed

ITA 5890/MUM/2017[2011-12]Status: DisposedITAT Mumbai24 Apr 2023AY 2011-12

Bench: Amit Shukla () & Ms. Padmavathy S. ()

Section 14ASection 41Section 41(1)

partial relief to the assessee whereby the notional interest on advance to AE was revised to LIBOR (+) 150 bps. For addition made under section 41(1) towards creditors, the Ld.CIT(A) deleted the addition to the ex tent of rs.1,53,46,999/-. 3 ITA 5890/Mum/2017 With regard ... since the assessee has offered the balance amount to tax in A.Y. 2012-13. The addition on account of advances to customers under section 41(1, the Ld.CIT(A) gave partial relief to the assessee after examining of various details submitted. With regard to the disallowance of loss on forward

DCIT, New Delhi vs. M/S. Tikonainfinet Ltd., New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 4658/DEL/2016[2010-11]Status: DisposedITAT Delhi24 Apr 2023AY 2010-11

Bench: Dr. Brr Kumar & Ms. Astha Chandraasstt. Year: 2010-11

For Appellant: Shri Akshay Shah, CAFor Respondent: Shri H.K. Chaudhary, CIT-DR
Section 143(3)Section 35ASection 37(1)Section 41(1)

Accordingly ground No. 1 of the Revenue is rejected. 6. Ground No. 2 relates to addition of Rs. 23,60,79,000/- under section 41(1) of the Act on account of unexplained creditors which stands deleted by the Ld. CIT(A). The Ld. AO has discussed this issue ... Therefore, the Ld. AO made the impugned addition. 6.1 On appeal, the assessee submitted before the Ld. CIT(A) that the addition under section 41(1) cannot be made as trading liability did not cease. The Ld. CIT(A) enquired from the assessee about the payment to the creditors

M/S. Sums Exim Pvt. Ltd., Jaipur vs. ITO, Jaipur

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

ITA 31/JPR/2017[2010-11]Status: DisposedITAT Jaipur24 Apr 2023AY 2010-11

Bench: SHRI SANDEEP GOSAIN (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri B.P. Mundra, CAFor Respondent: Smt. Runi Pal, Addl. CIT

case decided by division bench of Hon'ble Delhi High Court, the following observation was made with regards to Cessation of liability under Section 41(1) of the Income Tax Act, 1961. 3.3. The Hon'ble Income Tax Appellate Tribunal, Ahmedabad Bench, the following observation was made with regards ... Cessation of liability under Section 41(1) of the Income Tax Act, 1961. "Considering the facts of the case as noted above it is clear that the assessee had continued to show the admitted amounts as liabilities in its balance sheet. The liabilities reflected in the balance sheet cannot

Smt Ramilabe Ramji Bhadra, Jamnagar vs. The ITO, Ward 1 (2), Jamnagar

In the result, the appeal of the assessee is allowed

ITA 17/RJT/2018[2007-08]Status: DisposedITAT Rajkot21 Apr 2023AY 2007-08

Bench: Mrs. Annapurna Gupta & Ms. Madhumita Royआयकर आयकर अपील आयकर आयकर अपील अपील संसंसंसं./ Ita No. 17/Rjt/2018 अपील Assessment Year : 2007-08 Ramila R. Bhadra, C/O. Laxmi Enterprise, Vs The Income-Tax Officer, C-2-35/2, Gidc, Shankar Tekri, Ward 1(2), Udhyog Nagar, Jamnagar Jamnagar-361004 Pan : Afwpb 3443 F अपीलाथ" अपीलाथ"/ (Appellant) अपीलाथ" अपीलाथ" "" "" यथ" "" "" यथ" यथ"/ (Respondent) यथ" Assessee By : Shri Dushyant Maharshi, Ar Revenue By : Shri B.D. Gupta, Sr Dr सुनवाई क" तारीख/Date Of Hearing : 10/04/2023 घोषणा क" तारीख /Date Of Pronouncement: 21/04/2023 आदेश/O R D E R आदेश आदेश आदेश Per Ms. Madhumita Roy:-

For Appellant: Shri Dushyant Maharshi, ARFor Respondent: Shri B.D. Gupta, Sr DR
Section 143(3)Section 144Section 41(1)

Assessment Year 2007-08, whereby and whereunder the addition to the tune of Rs.49,39,297/- made by the Assessing Officer under Section 41(1) of the Act has been confirmed by the learned CIT(A). 2. We have heard the rival submissions made by the respective parties and also ... Section 144 of the Act treating the liabilities being sundry creditors amounting to Rs.63,50,779/- as fictitious liabilities within the meaning of Section 41(1) of the Act and disallowed the same, which was in turn deleted by the First Appellate Authority in appeal upon considering the remand report

Crest Paper Mills Ltd., Mumbai vs. DCIT Cir. - 8(1), Mumbai

In the result, additional ground no

ITA 3044/MUM/2016[2010-11]Status: DisposedITAT Mumbai18 Apr 2023AY 2010-11

Bench: Shri Vikas Awasthy & Shri Amarjit Singhvk-Vk-La- 3044@Eaqcbz@2016 ¼Fu-Oa- 2010&11½ M/S. Crest Paper Mills Ltd. 2Nd Floor, Tarun Plastic Compound, Morga Village, Andheri (E) Mumbai-400 066 ..... Vihykfkhz/Appellant Pan No. Aaacc4343D Cuke Vs. Deputy Commissioner Of Income Tax, 8 (1), Aayakar Bhavan ..... Izfroknh/Respondent Mumbai-400 020

For Appellant: Shri Ajay Singh, Advocate izfroknh }kjk@For Respondent: Shri V. S. Mahajan, Sr. AR
Section 41(1)

component of the working capital loan may directed to be reduced by the same i.e. Rs.2,05,00,000/-within the meaning of section 41(1) of the Act.” 4. Shri Ajay Singh appearing on behalf of the assessee submits at the outset that the additional ground raised in appeal

M/S. Chinar International, New Delhi vs. ACIT, New Delhi

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

ITA 2357/DEL/2015[2008-09]Status: DisposedITAT Delhi29 Mar 2023AY 2008-09

Bench: Shri Anil Chaturvedi & Shri C.M. Gargassessment Year: 2008-09 Chinar International, Vs. Acit, B-9, Housing Society, Circle-32(1), South Extension Part I, New Delhi. New Delhi. Pan: Aacfc1770D (Appellant) (Respondent) Assessee By : Dr. Rakesh Gupta, Advocate & Shri Somil Agarwal, Advocate Revenue By : Shri Pankaj Khanna, Sr. Dr Date Of Hearing : 28.02.2023 Date Of Pronouncement : 29.03.2023 Order Per C.M. Garg, Jm: This Appeal Filed By The Assessee Is Directed Against The Order Dated 02.03.2015 Of The Cit(A)-18, New Delhi, Relating To Assessment Year 2008-09. 2. Grounds Of Appeal Raised By The Assessee Read As Under:- “1. Reg : Issue Regarding Unexplained Business Income That On The Basis Of Facts & Circumstances Of The Case The Ld. Cit(A) Has Erred In Not Deleting The Additions Of Rs.1146695/= Made By Ld A.O As Bad In Law Without Proper Adjudication Of Assessee'S Submissions. In Any View Of The Matter & In Any Case The Action Of Ld Cit (A) In-L Not Deleting The Additions/ Setting Aside The Order Of Ld A.O Is Bad In Law As The Same Was Passed Contrary To Documentary Evidence Without Proper Rebuttal Of Appellant'S Submissions Against The Principles Of Natural Justice. 2. Reg : Income From Undisclosed Sources Without Adequate Justification That On The Basis Of Facts & Circumstances Of The Case The Ld. Cit(A) Has Erred In Not Deleting The Additions Made By Ld A.O At Rs.120325/= As Assumed Income From Undisclosed Sources. In Any View Of The Matter & In Any Case The Action Of Ld Cit(A) In Not Deleting The Additions/ Setting Aside The Order Of Ld A.O Is Bad In Law As The Same Was Passed Without Proper Application Of Mind Against The Principles Of Natural Justice.

For Appellant: Dr. Rakesh Gupta, Advocate &For Respondent: Shri Pankaj Khanna, Sr. DR
Section 41(1)

Stambh Engineers. The ld. Counsel submitted that no expenditure has been claimed by the assessee, hence, there is no question of applying section 41(1) of the Act. Therefore, the addition made by the AO may kindly be deleted. 4. Replying to the above, the ld. Sr. DR supported

Yuvraj Agro Foods Pvt. Ltd., New Delhi vs. ACIT, Circle-27(2), New Delhi

In the result, appeal of the assessee is dismissed

ITA 9233/DEL/2019[2015-16]Status: DisposedITAT Delhi28 Mar 2023AY 2015-16

Bench: Shri Challa Nagendra Prasad & Shri Pradip Kumar Kediaआ.अ.सं/.I.T.A No.9233/Del/2019 िनधा"रणवष"/Assessment Year: 2015-16 बनाम Yubraj Agro Foods Pvt. Ltd. Acit C-177, Fateh Nagar, Vs. Circle 27(2) Jail Road, New Delhi. New Delhi. Pan No. Aaccn5302P अपीलाथ" Appellant ""यथ"/Respondent

Section 133(6)Section 271(1)(c)Section 41(1)Section 68

been solely that non confirmation from the creditors does not mean that there is cessation of liability within the meaning of I.T.A.No.9233/Del/2019 section 41(1). The AO had issued summons u/s 133(6) which remained uncomplied with by many parties. As has been held in many judicial precedents

Jindal Infosolutions Ltd, Gurgaon vs. DCIT, Circle-13(1), New Delhi

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

ITA 5979/DEL/2018[2013-14]Status: DisposedITAT Delhi28 Mar 2023AY 2013-14

Bench: Sh. N. K. Billaiya & Sh. Anubhav Sharmaassessment Year: 2013-14 Jindal Infosolutions Ltd. Dcit 2Nd Floor, Jindal Centre, Vs Circle -13 (1) Plot No.2, Sector-32, New Delhi Gurgaon-122001 Pan No.Aaccn7616C (Appellant) (Respondent)

Section 143(3)Section 234ASection 40Section 41(1)

facts and in law in upholding the Addition of Rs 60,60,995/- to the total income as per the provisions of section 41(1) of the Act. 9. That on the facts and in- the circumstances of the case, and on proper interpretation of Section 41(1

M/S. Fazal Frozen Food (P) Ltd., Meerut vs. JCIT, Meerut

In the result, this appeal of the assessee stands allowed

ITA 6009/DEL/2016[2011-12]Status: DisposedITAT Delhi24 Mar 2023AY 2011-12

Bench: Shri Shamim Yahya & Ms. Astha Chandra[Assessment Year: 2011-12]

Section 133(6)Section 40Section 40A(3)Section 41

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘B’: NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND Ms. ASTHA

Sunil Kumar Garg, Delhi vs. ITO, Ward- 36(2), New Delhi

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

ITA 3182/DEL/2018[2014-15]Status: DisposedITAT Delhi21 Mar 2023AY 2014-15

Bench: The Assessing Officer.

For Appellant: Shri V.K. Sabharwal, AdvocateFor Respondent: Ms. Indu Bala Saini, Sr. DR
Section 234BSection 271(1)(c)Section 41Section 41(1)

Although assessee has raised various grounds, the sole issue in the appeal is addition of Rs.1,47,10,075/- under section 41 (1) of the Income- tax Act, 1961 (for short 'the Act'). 4 ITA No.3182/Del./2018 4. Brief facts of the case are that from the assessment order

Planman Motion Pictures Pvt. Ltd, New Delhi vs. ITO Ward-20(1), New Delhi

In the result, the appeal of the assessee stands dismissed

ITA 1789/DEL/2019[2014-15]Status: DisposedITAT Delhi14 Mar 2023AY 2014-15

Bench: Shri Shamim Yahya & Ms. Astha Chandra[Assessment Year: 2014-15]

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

amount has not been written off in the books of accounts of the assessee and hence no addition can be made under section 41(1) of the Income Tax Act.” 3. Brief facts of the case are that the assessee company e-filed its return of income ... sundry creditors and other liabilities. 4. Upon assessee’s appeal, the Ld. CIT(A) elaborately dealt with the issue of application of section 41(1) as under:- “5.2. I have carefully considered the assessment order and written submission filed by the Ld. AR. The perusal of the appellant's financials

Vikas Dugar, Jaipur vs. ACIT, Cen Circle-2 Jaipur, Jaipur

In the result the appeal filed by the assessee is allowed

ITA 27/JPR/2023[2013-14]Status: DisposedITAT Jaipur06 Mar 2023AY 2013-14

Bench: The Actual Hearing Of The Case.”

For Appellant: Shri Surendra Sha (C.A.)For Respondent: Smt Monisha Choudhary (Addl. CIT) a
Section 133(6)Section 143(3)Section 148

could have been made u/s 68 in respect of trade creditors amounting to Rs 1930214.00 It is well settled that the provisions of section 41(1) can be invoked only when trading liability incurred by the assessee has subsequently found to have ceased to exist in the relevant year

The ITO, Ward-1, Palakkad vs. M/S. Snofield Foods Private Limited, Palakkad

In the result, the appeal filed by the Revenue is dismissed

ITA 837/COCH/2022[2006-2007]Status: DisposedITAT Cochin03 Mar 2023AY 2006-2007

Bench: Shri George George K. & Ms. Padmavathy S.The Income Tax Officer -1 Vs M/S. Snofield Foods Pvt. Ltd. Aayakar Bhavan Door No. V/623B, Marutharode English Church Road Village, Kuppayode Road Palakkad 678014 Marutharode, Palakkad 678007 Pan – Aafcs3164B (Appellant) (Respondent) Assessee By: Shri P.M. Veermani, Ca Revenue By: Smt. J.M. Jamuna Devi, Sr. Dr Date Of Hearing: 28.02.2023 Date Of Pronouncement: 03.03.2023 O R D E R Per: George George K., J.M. This Appeal At The Instance Of The Revenue Is Directed Against The Order Of The Cit(A)/Nfac, Delhi Dated 02.06.2022. The Relevant Assessment Year Is 2006-07. 2. Revenue Has Raised The Following Grounds Of Appeal: - “1) The Learned Commissioner Of Income Tax(Appeals) Erred In Deleting The Addition Made By Assessing Officer U/S 41(1), Has Not Gone Into The Merits Of The Issue Simply Relying On The Fact That The Similar Issue Is Already Decided In Favour Of The Assessee In The Case Of Sister Concerns. 2) The Learned Commissioner Of Income Tax (Appeals) Has Not Taken Into Consideration That The Assessee Should Have Credited Percentage Of Deduction Of The Freezer Deposit Every

For Appellant: Shri P.M. Veermani, CAFor Respondent: Smt. J.M. Jamuna Devi, Sr. DR
Section 143(3)Section 41(1)

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri George George K., Judicial Member and Ms. Padmavathy S

DCIT, Circle- 17(2), New Delhi vs. National Fertilizers Ltd., New Delhi

In the result, the appeal of the assessee is allowed and that of the Revenue is dismissed

ITA 5547/DEL/2017[2006-07]Status: DisposedITAT Delhi01 Mar 2023AY 2006-07

Bench: Dr. B. R. R. Kumarsh. Yogesh Kumar Us

For Appellant: Sh. Ved Jain, AdvFor Respondent: Sh. Atiq Ahmad, Sr. DR
Section 143(3)Section 148

THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘E’, NEW DELHI Before Dr. B. R. R. Kumar, Accountant Member Sh. Yogesh Kumar

National Fertilizers Ltd., New Delhi vs. ACIT, Circle-13(1), New Delhi

In the result, the appeal of the assessee is allowed and that of the Revenue is dismissed

ITA 4723/DEL/2017[2006-07]Status: DisposedITAT Delhi01 Mar 2023AY 2006-07

Bench: Dr. B. R. R. Kumarsh. Yogesh Kumar Us

For Appellant: Sh. Ved Jain, AdvFor Respondent: Sh. Atiq Ahmad, Sr. DR
Section 143(3)Section 148

THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘E’, NEW DELHI Before Dr. B. R. R. Kumar, Accountant Member Sh. Yogesh Kumar

Income Tax Officer Ward-2, Moga vs. Measge Tlg Agro Traders Privte Limited, Moga

In the result, the appeal of the revenue, IT No- 637/Asr/2019 is dismissed

ITA 637/ASR/2019[2014-158]Status: DisposedITAT Amritsar22 Feb 2023AY 2014-158

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

Section 143(3)Section 250(6)Section 68

same is not payable 7 Assessment Year 2014-15 by the assessee, and treated the said liability as income by invoking provision of section 41(1) of the Act. The CIT(A), while deleting the said addition, has observed that the similar addition was made in the case of Febon ... come to the conclusion that the aforesaid liability of the assessee cannot be said to have ceased to exist and the provision of section 41(1) and Explanation to this provision are not applicable, because the assessee is still showing it as a liability in its books

Peerless Consultancy Services Pvt Ltd, New Delhi vs. ACIT Central Circle-16, New Delhi

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

ITA 9750/DEL/2019[2017-18]Status: DisposedITAT Delhi16 Feb 2023AY 2017-18

Bench: Dr. B. R. R. Kumar & Shri Yogesh Kumar U.S.

Section 69C

treating existing liability is cessation of liability u/s 41(1) of the Act. 24. The Ld. A.O. had invoked the provisions of Section 41(1) of the Act and the said addition has been made based on the suspicion that the liabilities are outstanding more than 3 years