Short Note : 1. The assessee is a Public Limited Company. The relevant assessment year is 1955-56 for which the previous year ended on 30.9.1954. In the reassessment proceedings started by the Income-tax Officer, an amount of Rs. 36,884/- shown in the balance-sheet of the assessee company to the credit of the General Reserve Fund, was taxed as income of the assessee. The Appellate Assistant Commissioner upheld the order of the Income-tax Officer. The Tribunal, however, came to the conclusion that this amount could not be taxed. It has been found by the Tribunal that in the previous year this amount of Rs. 36,884/- was shown as liability of the assessee. The liability became time-barred long back. In the balance-sheet for the relevant assessment year, the said amount was transferred to the General Reserve Fund of the assessee. The Tribunal's opinion was that simply because the amount became time-barred, it could not be said that there was any remission or cessation of liability within the meaning of section 41 of the Act. In this view of the matter, the Tribunal held in favour of the assessee that the amount was not taxable. 2. It is well known that when a liability becomes barred by the law of limitation, there is neither remission nor cessation of the liability, the liability is not extinguished. It is only the creditor's remedy that becomes barred. Therefore, it cannot be held on any reasonable argument that by lapse of time when a debt due by the assessee becomes time-barred, there is cessation of the liability under section 41. Indeed, this view has been taken by Bombay, Allahabad, Calcutta and Gujarat High Courts. These cases are all referred in Kanga and Palkhivala. The Law and Practice of Income Tax, 7th Edition, Volume 1, Page 528. Apart from the cases referred to therein, our attention was also drawn to the case of Gannon Dunkerley and Co. Ltd. vs. C.I.T. 102 ITR 428 in which the Bombay High Court has followed its previous view. In our opinion, as there is no room for any doubt whatsoever that by lapse of time a liability does not cease, we do not think that it would be proper for us to direct the Tribunal to refer the questions formulated by the Department. The Law and Practice of Income Tax, 7th Edition, Volume 1, Page 528 and 10 ITR 428 relied on. The Law and Practice of Income Tax, 7th Edition, Volume 1, Page 528 and 10 ITR 428 relied on. Application dismissed.