1979 (6) TMI 80

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....tion is whether the sum of Rs. 16,336 and Rs. 58,091 being unclaimed wages and unclaimed bonus, are taxable in this year under s. 41(1) of the IT Act, 1961, or not. 2. The learned ITO and the AAC were of the opinion that the claims became barred by time. Not only this, the amounts have already been merged in the profits of the company, and have become a part of the share-holders' profit. 3. ....

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....as such, there was cessation of liability. 5. I have heard the parties and perused the entire evidence on record. There is no dispute regarding the facts. From the facts, as found out by the learned AAC, in my opinion, there was no cessation of liability or remission under section 41 of the IT Act, 1961. On the question as to how does a time-bar act on a subsisting debt or liability, the positi....

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....the Act, so as to attract its operation. Reference may be made to the decision in the case of Kohinoor Mills Co. Ltd. vs. CIT(1), J.K. Chemicals Ltd. vs. CIT (6) Baroda Traders Ltd. vs. CIT (7), and Bhagwat Prasad & Co. vs. CIT (2). There is another aspect of the matter. If the unclaimed liability is shown as a subsisting debt in the annual balance-sheet of the assessee; such action on the part of....

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....s to be granted by the creditor. Similarly, cessation of the liability may occur either by reason of the operation of the law, i.e. on the liability becoming unenforceable at law by the debtor declaring unequivocally his intention not to honour his liability when payment is demanded by the creditor, or by a contract between the parties on by discharge of the debt-the debtor making payment thereof ....