Section 41(1)

In business, there are circumstances where a person might have acquired a liability, but later on, he need not have to spend it for one or other purpose. The Income Tax Act brings to tax such possibilities which are no more obligatory. The region brings into its ambit interest in cash or in-kind received by an individual by reduction or cessation of liability. The only demand is that the individual must have a deduction or allowance in his computation of income for the said liability in any previous years.