Law:

Section:

Section 41(1), read with section 5, of the Income-tax Act, 1961 - Remission or cessation of trading liability - Assessment year 1987-88 - During previous year relevant to assessment year 1987-88, assessee-company had received refund of counter-vailing duty as per order of Collector of Central Excise - Assessing Officer brought said counter-vailing duty refund to tax in assessment year 1987-88 under section 41(1) on ground that refund had accrued to assessee and assessee had actually received said refund amount - Commissioner (Appeals) however, set aside order of Assessing Officer and held that actual cessation or remission of liability under section 41(1) took place in assessee's case only when appeal by Excise Department was withdrawn as per Supreme Court's order dated 26-7-1998 and, therefore, counter-vailing duty refund, could not be included as income of assessment year 1987-88 - Tribunal upheld order of Commissioner (Appeals) - Whether merely because revenue had filed an appeal before Apex Court, which was later withdrawn, it did not mean that refund had not actually accrued to assessee and assessee had not actually received it - Held, yes - Whether since refund was received by assessee as per order of Collector of Central Excise and there was a cessation of liability, which had been allowed earlier in computation of income, refund of amount was assessable under provisions of section 41(1) - Held, yes FACTS During the previous year relevant to the assessment year 1987-88, the assessee-company had received refund of counter-vailing duty as per order of Collector of Central Excise. The Assessing Officer, therefore, brought the said counter-vailing refund to tax under section 41(1) on the ground that the refund had accrued to the assessee and the assessee had actually received the amount. On appeal, the Commissioner (Appeals), however, set aside the order of the Assessing Officer and held that the actual cessation or remission of liability under section 41(1) took place only when the appeal by the Excise Department was withdrawn as per Supreme Court's order dated 26-7-1998 and, therefore, counter-vailing duty refund could not be included as income of the…

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