41. Profits chargeable to tax. - 3[(1) Where an allowance or deduction has been made in the
assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee
(hereinafter referred to as the first -mentioned person) and subsequently during any previous year, -
(a)the first -mentioned person has obtained, whether in cash or in any other manner whatsoever,
any amount in respect of such loss or expenditure or some benefit in respect of such trading liability
by way of remission or cessation thereof, the amount obt ained by such person or the value of benefit
accruing to him shall be deemed to be profits and gains of business or profession and accordingly
chargeable to income -tax as the income of that previous year, whether the business or profession in
respect of wh ich the allowance or deduction has been made is in existence in that year or not; or (b)the successor in business has obtained, whether in cash or in any other manner whatsoever,
any amount in respect of which loss or expenditure was incurred by the first -mentioned person or
some benefit in respect of the trading liability referred to in clause ( a) by way of remission or
cessation thereof, the amount obtained by the successor in business or the value of benefit accruing to
the successor in business shall b e deemed to be profits and gains of the business or profession, and
accordingly chargeable to income -tax as the income of that previous year.
4[Explanation 1.-For the purposes of this sub -section, the expression “loss or expenditure or some
benefit in resp ect of any such trading liability by way of remission or cessation thereof” shall include the
remission or cessation of any liability by a unilateral act by the first mentioned person under clause ( a) or
the successor in business under clause ( b) of that s ub-section by way of writing off such liability in his
accounts.]
Explanation 5[2]-For the purposes of this sub -section, “successor in business” means, - (i)where there has been an amalgamation of a company with another company, the
amalgamated company; (ii)where the first -mentioned person is succeeded by any other person in that business or
profession, the other person; (iii)where a firm carrying on a business or profession is succeeded by another firm, the other
firm;]
6[(iv) where there has been a d emerger, the resulting company.]
7[(2) Where any building, machinery, plant or furniture, - (a)which is owned by the assessee;