Law:

Section:

Section 41(1) of the Income-tax Act, 1961 - Remission or cessation of trading liability - Assessment year 1968-69 - Assessee-firm was assessed to certain amount as purchase tax - Subsequently, assessee filed a writ petition challenging levy of purchase tax - High Court allowed writ petition of assessee following a Supreme Court decision - Accordingly, assessee claimed refund of amount deposited by it as purchase tax which was allowed - ITO brought to tax said refunded amount as assessee's income under section 41 - Whether since amount had not been returned on account of remission of liability, and liability to pay tax by assessee did not cease on date when was pronounced by Supreme Court, amount in question was not assessable in hands of assessee under section 41 - Held, yes FACTS The assessee-firm was carrying on business of crushing of oil seeds. It was assessed to an amount of Rs. 39,489 as purchase tax for the purchase of groundnuts. The amount was deposited by it. The assessee challenged the levy of purchase tax by filing a writ petition. The writ petition of the assessee was accepted. One of the partners of the assessee, thereafter, filed an application for refund of the amount deposited by it in view of the order of the court, which was allowed. The sum was refunded to the assessee on 5-8-1967. In its returns of income, the assessee claimed exemption in respect of the amount of Rs. 39,489 on the ground that the liability to pay the aforesaid amount to the Punjab Government existed under the Punjab General Sales Tax (Amendment and Validation) Act, 1967, and, therefore, its receipt could not be deemed to be income under section 41. The ITO brought to tax the said amount as the assessee's income under section 41. On appeal, the AAC decided in favour of the assessee. The Tribunal affirmed the order of the AAC and dismissed the revenue's appeal. HELD A reading of the section 41(1) shows that if deduction has been made in respect of expenditure or trading liability incurred by the assessee, and subsequently the assessee has obtained in cash any amount in respect of such expenditure, or benefit in respect of such liability by way of remission or cessation…

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