Recovery of expenditure & Remission and cessation of trading liability - (New) Section 38(1)(a) and (4) / (Old) Section 41(1)

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....iven Liabilities [ Section 38(1)(a) ] The following sums shall be deemed to be profits and gains of business or profession and shall be chargeable to income-tax If an assessee has already claimed a deduction or allowance for: • a loss, • an expenditure, or • a trading liability, and later receives some benefit related to that, then that benefit is tr....

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....of Successors [ Section 38(4) ] • If the benefit arises to, or the amount is received by, the successor in the business, then such benefit or amount shall be taxed as income in the hands of the successor. Definition of "Successor in Business" [ Section 38(6)(b) ] "successor in business" means -  • (i) the amalgamated company, where there has been an amalgamatio....

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.... in respect of a trading liability and subsequently there is a remission or cessation of the trading liability, then the amount of trading liability so ceased shall be deemed to be the income under the head PGBP of the previous year in which such remission or cessation took place. This shall apply even if the business is not in existence. • Writing of the liability unilaterally will a....

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....then the person succeeding will be chargeable to tax on any amount received in relation to which deduction or allowance has been made. UNILATERAL WRITING OFF OF TRADING LIABILITY It is taxable even if it is a unilateral act and the other party has not discharged liability of the taxpayer or the other party has filed the suit against the assessee. NOTE:- • For applicability of....