Law:

Section:

Section 41(1) of the Income-tax Act, 1961 - Remission or cessation of trading liability - Assessment year 1986-87 - Whether excise duty collection is a trading receipt in year of receipt and, hence, excise duty refund is liable to tax in hands of assessee under section 41(1) - Held, yes Section 256 of the Income-tax Act, 1961 - High Court, reference to - Whether in case where a similar question had been answered in an earlier case in a particular way, an identical question of law arising in a later year would be a referable one - Held, yes - Whether it cannot always be said that in all cases where similar question of law had been answered in an earlier case in a particular way, an identical question of law cannot be answered in a different way - Held, yes FACTS The account books of the assessee revealed that in the previous year relevant to the assessment year 1986-87, the assessee received refund of excise duty which was not credited in the profit and loss account on the ground that same was not taxable. It was contended that that amount was to be refunded, in turn, to its various customers, hence, the said receipt did not constitute the income of the assessee. The Assessing Officer rejected the contentions and treated the refund amount as income and added the same to the total income of the assessee. On appeal, the Commissioner (Appeals) deleted the addition. On further appeal by the revenue, the Tribunal held that as excise duty collection was a trading receipt and excise payable was a trading liability, the assessee also was deemed to have claimed the excise payable as a trading liability. Consequently, the Tribunal held that refund received by the assessee as a remission of such liability would attract the provisions of section 41(1). The Tribunal, therefore, set aside the order of the Commissioner (Appeals). On reference, the assessee placed reliance on the Division Bench judg-ment in CIT v. Wolkem (P.) Ltd. [1997] 228 ITR 129 / 92 Taxman 346 (Raj.), that is, in the assessee's own case in which the Court held that refund of excise duty was not in the nature of income under section 41(1). It was, therefore, contended that it was not open to take a…

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