Addition of Time Barred Creditors in the IT assessment

Assistant Commissioner of Income-tax, Central Cir. 14, Mumbai Versus Wockhardt Ltd.

The Mumbai ITAT has held that the Assessing Office cannot add back any sundry creditors as income by reason that said liability has become time-barred under limitation Act.


Held that No such condition is there in sec. 41(1) for considering the cessation of any liability and in respect of any expenditure, even if within the period of limitation of three years, the assessee unilaterally write off the liability within one year then also the provision of sec. 41(1) is applicable - Decided in the favour of the assessee.


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