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TMI Blog1987 (11) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that the department had sought to tax this refund u/s 41 (1) on the premise that the liability may not be paid ultimately and may rather be appropriated by the assessee in which case it would escape tax altogether. 3. According to the learned Departmental Representative Mr. B. K. Iyer, this is a mixed question of law and facts. While on the other hand the argument of the learned counsel for the assessee was that the Tribunal has given a finding of facts that it represent liability on the ground that the liability existed on the date ford the assessment year and there was no cessation of liability. It was further argued that not all questions are referable questions of law. Referring to section 256(1) as well as 256(2), it was argued that the Tribunal has to draft a statement of case only if it is satisfied that a question of law does arise. He argued that the words as contained in section 256(1) only indicates that the Tribunal must be satisfied that a question of law does arise and it the question is already answered by the High Court of that State or by the Supreme Court which would only mean that the answer is either self-evident or already settle by a High Court of land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that the amount so received which was termed as deposit was in the nature of deposit only and that when ultimately the excise authorities granted the refund to the assessee on the ground that the product manufactured by it are not as the excisable and the assessee came to receive the amount not as the ultimate owner of the money but only as a intermediary as the ultimate owners were the several customers who had purchased goods from it. It was also observed that certain customers had claimed the refund of excise directly from the authorities and the refunds were so granted. The department could not bring any evidence to substantiate that there was any cessation of liability from the several customers in favour of the assessee. The Tribunal thus gave a finding of fact that the assessee received the amount for purposes of passing the amount to the respective owners and that there was no cessation of liability as already observed earlier. The only basis on which the Department sought to tax the amount was on the apprehension that the assessee may not pay the amounts to the various customers and they never intend to tax it on the ground of any cessation of liability by any of the cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see by referring to a large number of authorities, namely, CIT v. Alchemic (P.) Ltd. [1981] 130 ITR 168 (Guj.), CIT v. Kalinga Airlines (P.) Ltd. [1987] 168 ITR 238 (Ori.), CIT v. Thirumalaiswamy Naidu Sons [1984] 147 ITR 657 (Mad.), and J. K. Chemicals Ltd. v. CIT [1966] 62 ITR 34 (Bom.) Even at the time of finalising the original order, I was doubtful as to whether the amount could be excluded from the assessee's income altogether, after it had already been credited to the P L A/c, because thereafter it could never be brought to tax u/s 41(2) of the IT Act. In my opinion, the following question does arise out of the order of the Tribunal and should be submitted for opinion of the Hon'ble High Court : "Whether on the facts and in the circumstances of the case the Tribunal was correct in law in deleting the amount of Rs. 1,61,316 already received by the assessee from the Excise Deptt. and credited to its profit and loss account ?" Per Shri A. Kalyanasundharam, Accountant Member - I have perused the view of my learned brother. I am afraid I have not been able to agree to his view-point for the sole reason that despite the manner of depiction of an item in the accounts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tribunal in ITA No. 977/JP/83 is : "Whether on the facts and in the circumstances of the case, the refund of excise duty received by the assessee from the Excise Department amounting to Rs. 1,61,316 was the income of the assessee or not ? And if it is an income then under which provisions of the Act the same will be considered?" 2. The relevant facts are : The assessee is a private limited company having its previous year as calendar year. The assessment in this case for the assessment year 1980-81 was completed by the Income-tax Officer u/s 143(3) read with section 144B on 30-8-1983. In the original return filed by the assessee, it had declared an income of Rs. 2,30,490. It received a sum of Rs. 1,61,836 by way of refund of excise duty, which it claimed as not taxable. This refund of excise duty was credited to the profit and loss account. The Income-tax officer disallowed the assessee's claim holding that this sum received by the assessee was a revenue receipt and formed part of the total income of the assessee liable to tax. Aggrieved by the order of the Income-tax Officer, the assessee filed an Appeal before the learned Commissioner (A), who by his order dated 17-11-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the various customers and they never intend to tax it on the ground of any cessation of liability by any of the customers as there was no evidence at all for that purpose." He was also of the opinion that the answer to this is self-evident and therefore need not be referred to the High Court. The learned Judicial Member, however, held that a question of law arose out of the order of the Tribunal. 4. On hearing the learned counsel for the assessee as well as the learned Departmental Representative, I am of the opinion that the issue involved in this case is whether the liability to the assessee to refund the money to the customers had ceased or not. The learned Judicial Member was of the opinion that in the absence of any details as to the persons to whom, it is payable it could not be said that the liability had ceased. He was of the opinion that the amount received could be taxed as income, even though he held it is not taxable while disposing of the appeal, by expressing doubts about his conclusion. In view of that doubtful nature of the taxability of this sum, the matter must be referred to the High Court. The learned Accountant Member held that even though the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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