Dismissing the appeal of the assessee the Court held that ; lapse of ten years of time, coupled with fact that there was a change of business altogether by assessee, and fact that debts had become time barred and no creditor made any claim for recovery from assessee during any of these years, even upto now. Assessing authority is justified in the amount as cessation of liability. When a trading liability ceased de facto and de jure and whether or not such trading liability could be said to have ceased in law so as to apply section 41(1) depended upon the facts and circumstances of each case. (AY. 2003-04)
West Asia Exports & Imports (P.) Ltd. v. ACIT (2019) 412 ITR 208 / 262 Taxman 372 / 177 DTR 201/ 309 CTR 353(Mad.)(HC)
S. 41(1) : Profits chargeable to tax-Remission or cessation of trading liability-Timber business-Discontinuation of business for more than 10 years-Showing the creditors- Application of common sense principles-Burden of proof on assessee to show subsistence of liability-Liable to be taxed as profits of business.