Dismissing the appeal of the revenue the Court held that , it is well settled through series of judgments that merely because a debt has not been repaid for over three years, would not automatically imply cessation of liability. Exhaustion of period of limitation may prevent filing of recovery proceedings in a Court of law, nevertheless it cannot be stated by itself that the liability to repay the amount had ceased. Such liability cannot be termed as bogus .( ITA No. 1288 of 2016, dt. 04.01.2019) ( AY.2010-11)
PCIT v. Pukhraj S. Jain (Bom)(HC),www.itatonline.org
S. 41(1) : Profits chargeable to tax – Remission or cessation of trading liability – Old unpaid liability for sundry creditors- Exhaustion of period of limitation may prevent filing of recovery proceedings in a Court of law, nevertheless it cannot be stated by itself that the liability to repay the amount had ceased- Addition cannot be made .