Law:

Section:

Section 41(1) of the Income-tax Act, 1961 - Remission or cessation of trading liability Amount collected towards sales tax which remained unpaid and unpayable to Department which was also not refunded to customers, was liable to be treated as income in hands of assessee under section 41(1) [Assessment year 1981-82] [In favour of revenue] CIT v. Markanda Vanaspati Mills Ltd. [2009] 311 ITR 306 (Punj. & Har.) The amount collected towards sales tax which remained unpaid and unpayable to the Department, which was also not refunded to the customers, was liable to be treated as income in the hands of the assessee under section 41(1). As and when the amount was to be refunded to the customers, the same might be claimed as deduction by the assessee in accordance with law. Yogesh Putney for the Appellant. JUDGMENT 1. The following question of law has been referred for the opinion of this court by the Income-tax Appellate Tribunal, Delhi Bench "E", New Delhi (for short, "the Tribunal"), arising out of its order dated April 25, 1989, in ITA No.3280/Del./1986, for the assessment year 1981-82 : "Whether, on the facts and in the circumstances of the case and on a correct and true interpretation of section 41(1) of the Income-tax Act, 1961, the Appellate Tribunal erred in law in holding that the balance which remained outstanding in the sales tax account after the payment of sales tax assessed did not amount to any allowance or deduction and that they could not be validly brought to tax under section 41(1) of the Income-tax Act, 1961, and, therefore, the order of the Assessing Officer could not be set aside by the learned Commissioner under section 263 ?" 2. The assessee was engaged in the sale of vanaspati and during the previous years relevant to the assessment years 1978-79 and 1979-80, the assessee collected sales tax and Central sales tax and credited the same to a separate account. The amounts so collected were later found to be in excess of the amounts payable towards the sales tax. The assessee transferred the said amounts to the suspense account but did not credit the same to the profit and loss account. This fact was not taken note of by the Assessing Officer.…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492