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TMI Blog2007 (7) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... ment upheld the view of the Commissioner of Income-tax (Appeals). This is how this income-tax appeal has been preferred under section 260A of the Income-tax Act, 1961. Though counsel for the Revenue sought to rely upon section 28(iv) of the Income-tax Act, 1961, in support of her contention that the Assessing Officer was justified in treating the aforesaid amount written back by the assessee as the income, we are afraid that neither the said section was relied upon by the Assessing Officer nor was pressed into service by the Revenue in appeal before the Income-tax Appellate Tribunal. That section even otherwise has no application. Section 41(1) of the Income-tax Act as was existing in the year of assessment (1996-97) before introduction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. The Supreme Court concurred with the reasoning of the Calcutta High Court reported in the case of CIT v. Sugauli Sugar Works P. Ltd. [1983] 140 ITR 286 where the Division Bench held thus: "The transfer of an entry is a unilateral act of the assessee, who is a debtor to its employees. We fail to see how a debtor, by his own unilateral act, can bring about the cessation or remission of his liability. Remission has to be granted by the creditor. It is not in dispute, and it indeed cannot be disputed, that it is not a case of remission of liability. Similarly, a unilateral act on the part of the debtor cannot bring about a cessation of his liability. The cessation of the liability may occur either by reason of the operation of law, i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rading liability incurred by the assessee; (2) Subsequently, a benefit is obtained in respect of such trading liability by way of remission or cessation thereof during the year in which such event occurred; (3) in that situation the value of the benefit accruing to the assessee is deemed to be the profit and gains of business which otherwise would not be his income; and (4) such value of the benefit is made chargeable to income-tax as the income of the previous year wherein such benefit was obtained. The High Court, agreeing with the Tribunal, rightly held that the resort to section 41(1) could arise only if the liability of the assessee can be said to have ceased finally without the possibility of reviving it. On the facts found by the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anced on behalf of the appellant. Incidentally, we may mention that the controversy relates to the period anterior to the introduction of Explanation 1 to section 41(1)." We need not elaborate that the controversy relates to the period anterior to the introduction of Explanation 1 to section 41(1) has been dealt with and considered on the basis of the position obtaining in section 41(1) without reference to the said Explanation. It is trite saying that if there is a doubt about the taxing provision, the benefit of doubt must go to the assessee. The fact that clarification was introduced under section 41(1) with effect from April 1, 1997, clearly shows that the doubt prevailing in respect of section 41(1) has been clarified and that benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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