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TMI Blog2013 (2) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed as expenditure in the Assessment Year 1972-73 would not be treated as remission or cessation of the trading liability so as to attract the provisions of Section 41(1) and the principles laid in the case Sugauli Sugar Works (P.) Ltd. (supra) are squarely applicable - against revenue. - IT REFERENCE NO. 128 OF 1989 - - - Dated:- 3-1-2013 - R.K. AGRAWAL AND PRAKASH KIRSHNA, JJ. ORDER 1. Income Tax Appellate Tribunal, Allahabad Bench, Allahabad has referred the following question of law under Section 256(1) of the Income-tax Act, 1961, hereinafter referred to as "the Act", for opinion to this Court. "Whether on the facts and in the circumstances of the case the Tribunal was correct in law in holding that the sum of Rs. 32,39,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rs. 32,39,929/- relating to the Assessment Year 1972-73 stands allowed so far. Therefore, it was held by him that this amount alone satisfies the condition laid down under Section 41(1) of the Act. Feeing aggrieved the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who vide order dated 22nd December, 1983 had held that Section 41(1) of the Act empowers the Assessing Authority to bring to tax the amount only when deduction is allowed in the past, with respect to some liability which ceases to exist or with respect to which there has been some remission as a result of which the assessee has derived some benefit. In the circumstances of case he held that there was no cessation or remission of the liability a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven our thoughtful consideration to the various plea raised by the learned counsel for the parties. We find that the provisions of Section 41(1) of the Act would be applicable only where there has been a remission or cessation of trading liability and if such liability has been allowed as an expenditure in any of the assessment years. It is not in dispute that the amount of Rs. 32,39,929/- towards gratuity has been allowed as trading liability during the Assessment Year 1972-73. The question is whether the said amount can be added back under Section 41(1) of the Act on the ground that there liability has been by way of remission or cessation as an unilateral act of writing back in the books of account by the assessee. The Apex Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee gets back the amount, which was claimed and allowed as business expenditure during an earlier year, deeming provision in Section 41(1) of the Act comes into play and it is not necessary that the Revenue should await the verdict of a higher court or Tribunal. In our considered opinion in the present case by an unilateral act of the assessee in writing back the amount of gratuity of Rs. 32,39,929/- which was allowed as expenditure in the Assessment Year 1972-73 would not be treated as remission or cessation of the trading liability so as to attract the provisions of Section 41(1) of the Act and the principles laid down by the Apex Court in the case Sugauli Sugar Works (P.) Ltd. (supra) are squarely applicable. We may mention here ..... X X X X Extracts X X X X X X X X Extracts X X X X
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