Can anyone suggest any case laws in respect of Sec 41(1) where the assessee has written off time barred sundry creditors after few years of its getting time barred? Whether the amount will be treated as his income in the year in which the creditors were written off or in the earlier year when the liability became time barred?
1 Replies
Rajeev
(www.rkmco.com)
(985 Points)
Replied 09 October 2009
I dont recommend cessation of creditors , there is no time barring provision to that effect . Have the creditors waived off their rights to recieve the amount ? if no , then be very careful before cessation of creditors , cos that could be an attraction for 148 unless it falls under time barring situation.
If yes , then u have to write off the creditors and it will be taxable in the year of write off
Case law : allied leather finishers pvt ltd ITA 58/LUC 09 Date 17/04/2009
Para no 21.2(ii) is relevant to you ( taxable in the year of write off )
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