https://www.taxtmi.com/caselaws?id=205904 A statutory bar on recovery against a sick company does not extinguish or defer an otherwise accrued liability for income-tax purposes. Under the mercantile system, a liability becomes deductible when it crystallises, not only when payment is made or enforcement becomes immediately available. Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 suspends execution and recovery proceedings until the necessary consent is obtained, but that restriction affects enforcement only and does not convert an accrued debt into a contingent liability. The liability therefore remained accrued when the decree was passed, and deduction could not be denied on that basis. en-us Wed, 10 Aug 2011 00:00:00 +0530 Wed, 28 Sep 2011 22:42:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=205904 A statutory bar on recovery against a sick company does not extinguish or defer an otherwise accrued liability for income-tax purposes. Under the mercantile system, a liability becomes deductible when it crystallises, not only when payment is made or enforcement becomes immediately available. Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 suspends execution and recovery proceedings until the necessary consent is obtained, but that restriction affects enforcement only and does not convert an accrued debt into a contingent liability. The liability therefore remained accrued when the decree was passed, and deduction could not be denied on that basis. Case-Laws Income Tax Wed, 10 Aug 2011 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=205904