Law: Income Tax Act, 1922

Section: 10(2A),10(2)(vii)secondproviso

Law: Income Tax Act, 1922

Section: 10(2A),10(2)(vii)secondproviso

Income-tax Act, 1922 -- Sections 10(2A), 10(2)(vii) second proviso Trading liability -- Cessation -- Liability standing in the accounts foregone or unclaimed -- Amount appropriated by assessee -- Whether amount includible in the total income of assessee -- Held yes -- Business income -- Sale of machinery or plant -- Machinery or plant not used in business in the relevant accounting year -- Sale of machinery or plant -- Excess realised over written down value -- Whether liable to tax -- Held no - Remission of liability-- Income-tax Appellate Tribunal already deciding question involved against petitioner in his own earlier case and petitioner-assessee taking no action against such decision -- Whether assessee deemed to have accepted principle of decision and estopped from challenging such principle in subsequent assessment -- Remission of liability -- Assessee having to pay certain dues to certain creditors but writing off and appropriating such amount himself -- Contention that such amounts became part of his income and hence liable to be included in has taxable income -- Held, correct -- Remission of liability -- Old machinery etc. being not used in business during years under consideration, amount left with assessee in form of difference between written down value and price received in form of profit of sale of unused assets-- Income-tax Tribunal, held not justified in holding such amounts liable to tax under second proviso to Section 10(2)(vii) -- JUDGMENT The judgment of the Court was delivered by K. E. CHAUHAN J.---In this case the assessee is M/s Delhi Cloth General Mills Co. Ltd., Lyallpur. The books of account of the assessee show that he had to pay certain dues to certain creditors. However, as the following table shows the amounts indicated against each year respectively were written off and appropriated by the assessee:- Sl. Assessment year Amount No. 1. 1960-61 ... 5,837.00 2. 1961-62 ... 4,263.00 3. 1962-63 ... 3,904.00 4. 1963-64 ... 3,579.00 5. 1964-65 ... 5,064.00 The Income-tax authorities held that as the aforesaid amounts were no longer outstanding against the assesse, inasmuch as, they had been apparently foregone or un-claimed by the…

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