Written acknowledgment must identify the creditor: general balance-sheet liabilities did not extend limitation for the winding up claim.

A written acknowledgment under the Limitation Act must disclose the debtor's liability to a specific creditor; balance-sheet entries that do not identify the claimant do not extend limitation. The court found that the respondent's balance-sheets recorded liabilities generally but did not admit the appellant's debt, so they could not save the winding up petition from being time-barred. Section 41 of the Income Tax Act was held irrelevant because it governs taxation of amounts treated as income and does not determine whether a debt has been acknowledged for limitation purposes. The refusal to entertain the winding up claim on limitation grounds was therefore left undisturbed.

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Issues: (i) Whether the winding up petition was barred by limitation and whether the alleged entries in the respondent's balance-sheets constituted acknowledgement of debt sufficient to save limitation. (ii) Whether Section 41 of the Income Tax Act, 1961 had any bearing on the question of acknowledgement of debt for limitation purposes.

Issue (i): Whether the winding up petition was barred by limitation and whether the alleged entries in the respondent's balance-sheets constituted acknowledgement of debt sufficient to save limitation.

Analysis: For an acknowledgement under Section 18 of the Limitation Act, 1963, the writing must be in existence and must disclose the identity of the creditor and the acknowledgment of indebtedness. It need not be addressed to the creditor, and the quantum need not be specified, but the debtor's liability to a particular creditor must be evident. The balance-sheet entries relied upon did not identify the appellant as a creditor whose debt had been admitted. The precedent cited on balance-sheet acknowledgements turned on facts where the creditor's name appeared in the relevant balance-sheets and did not support a general proposition that disclosure of debts to creditors in the abstract saves limitation for every creditor.

Conclusion: The petition was barred by limitation and the balance-sheets did not amount to a valid acknowledgement in favour of the appellant.

Issue (ii): Whether Section 41 of the Income Tax Act, 1961 had any bearing on the question of acknowledgement of debt for limitation purposes.

Analysis: Section 41 of the Income Tax Act, 1961 concerns taxation of amounts treated as profit in the hands of the assessee and has no relevance to whether a debt has been acknowledged for purposes of limitation.

Conclusion: The provision had no relevance to the dispute.

Final Conclusion: The impugned order refusing to entertain the winding up claim on limitation grounds required no interference, and the appeal failed.

Ratio Decidendi: To save limitation under Section 18 of the Limitation Act, 1963, the written acknowledgement must identify the creditor and the indebtedness; a balance-sheet that does not show acknowledgement of the appellant's debt does not extend limitation merely because it records liabilities to creditors generally.

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