2004 (12) TMI 20

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..... the assessee is chargeable as profit of the year to tax. We answer the above questions referred to us in the negative, i.e., in favour of the Department and against the assessee - - - - - Dated:- 2-12-2004 - Judge(s) : R. K. AGRAWAL., PRAKASH KRISHNA. JUDGMENT The judgment of the court was delivered by Prakash Krishna J. - The Income-tax Appellate Tribunal, Allahabad, has referred the following questions of law under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for opinion of this court, relevant to the assessment year 1976-77: "1. Whether in law and on the facts of the case the Tribunal was justified in holding that the remaining amount of refund of excise duty of Rs. 30,851 which was distri .....

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..... ee. The Tribunal has confirmed the order of the Commissioner of Income-tax (Appeals). Heard learned standing counsel for the Department. None appeared on behalf of the assessee as Sri R.S. Agarwal, advocate, has stated that he has no instruction in the matter. Reiterating the stand which was taken by the Department before the Tribunal, learned standing counsel submitted that the Tribunal was not correct in deleting the addition of Rs. 30,851, the excise duty to be refunded in the year 1970-71. It was contended that the liability in respect of this amount ceased to exist during the year under consideration and the sum of Rs. 30,851 was accordingly chargeable to tax under section 41(1) of the Act. We have given careful consideration to .....

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..... loss, expenditure or trading liability incurred by the assessee. This is the first step. Coming to the next step the assessee must have subsequently (i) obtained any amount in respect of such loss or (ii) obtained any benefit in respect of such trading liability by way of remission or cessation thereof. In case either of these events happen, the deeming provision enacted in the closing part of sub-section (1) comes into play. Accordingly, the amount obtained by the assessee or the value of benefit accruing to him is deemed to be profits and gains of business or profession and it becomes chargeable to income-tax as the income of that previous year. Learned standing counsel has placed reliance upon a judgment of this court in Indian Motor T .....

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