9911796707
TMI Blog2007 (7) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... ent by way of Explanation 1 will take effect from April 1, 1997, and will, accordingly, apply in relation to the assessment year 1997-98 and not previous years. The consideration of the matter by the Income-tax Appellate Tribunal does not suffer from any error of law. - - - - - Dated:- 30-7-2007 - Judge(s) : R. M. LODHA., R. S. CHAUHAN. JUDGMENT The liability of Rs. 11,80,973 written back by the assessee in the profit and loss account was treated as income in the assessment year 1996-97 by the Assessing Officer relying upon Explanation 1 introduced in section 41(1) with effect from April 1, 1997. The Commissioner of Income-tax (Appeals), in appeal, at the instance of the assessee set aside that finding of the Assessing Officer. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of remission or cessation and it should be of a particular amount obtained by him. Thus, the obtaining by the assessee of a benefit by virtue of remission or cessation is sine qua non for the application of this section. The mere fact that the assessee has made an entry of transfer in his accounts unilaterally will not enable the Department to say that section 41(1) would apply and the amount should be included in the total income of the assessee. The reasoning of the High Court is correct and we are in agreement with the same." It has been, thus, held in unequivocal terms by the Supreme Court that mere entry of transfer in his account by the assessee unilaterally would not enable the Department to say that section 41(1) would apply a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provision was made in the books of account towards purchase tax which was under dispute and the benefit of deduction from business income was availed of in the past years in relation thereto. The same was sought to be reversed by the assessee during the year ending on March 31, 1985, for whatever reason it be. The question is whether the circumstances contemplated by section 41(1) exist so as to enable the Revenue to take back what has been allowed earlier as business expenditure and to include such amount in the income of the relevant assessment year, i.e., 1985-86. In order to apply section 41(1) in the context of the facts obtaining in the present case, the following points are to be kept in view: (1) In the course of assessment for an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment has contended that the assessee itself took steps to write off the liability on account of purchase tax by making necessary adjustments in the books, which itself is indicative of the fact that the liability ceased for all practical purposes and therefore, the addition of the amount of Rs. 3,20,758 deeming the same as income of the year 1985-86 under section 41(1) is well justified of the Act. But, what the assessee has done is not conclusive. As observed by the Tribunal, a unilateral action on the part of the assessee by way of writing off the liability in its accounts does not necessarily mean that the liability ceased in the eye of law. In fact, this is the view taken by this court in CIT v. Sugauli Sugar Works (P.) Ltd. [1999] ..... X X X X Extracts X X X X X X X X Extracts X X X X
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