9911796707
TMI Blog1980 (2) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee in the accounting year ending March 31, 1961 ? " The question arises for consideration in the following circumstances. The assessee was an exporter of hides and skins. During the financial years relevant to the assessment years 1957-58 to 1959-60, the relationship between the assessee and the National Grindlays Bank Ltd, (hereinafter referred to as " the bankers ") became strained. The assessee had been having an overdraft account with the bank right from 1952. On July 18, 1955, he executed a letter of hypothecation in favour of the bank for an overdraft up to a limit of Rs. 1 lakh pledging therefor the stocks in the assessee's godown at Delhi. Earlier, a deed of lien had been executed in favour of the bankers in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee and removed all the skins, ostensibly under the terms of the letter of hypothecation dated July 18, 1955. To quote again from the assessee's letter to the ITO the assessee seized this opportunity and filed a criminal complaint against the banker on the strength of the fact that the letter of hypothecation had not been confirmed by the bankers. On February 6, 1960, a Magistrate at Delhi framed charges, inter alia, against two employees of the bank, under s. 380 read with s. 34 of the Indian Penal Code. The bank employees filed a revision petition before the Addl. Sessions judge praying that a recommendation be made to the High Court that the charge should be quashed but this petition was dismissed on May 18, 1960. The petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tody of the bank " and offered this amount for taxation spread over the three assessment years 1957-58 (Rs. 39,940), 1958-59 (Rs. 73,152) and 1959-60 (Rs. 80,067) and the amounts were so taxed in the respective assessment years. While completing the assessment for 1961-62, the ITO was of opinion that the sum of Rs. 1,93,159 (received by way of " compensation " from the bank on account of damages) was liable to tax in that assessment year. He, therefore, brought the amount to tax for this assessment year. Subsequently he took action to delete the additions made in the earlier assessment years but actually he deleted only the additions (aggregating to Rs. 1,13,092), made in the assessment years 1957-58 and 1958-59 but the addition of Rs. 80,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opinion that the amount realized is a part of the consideration for wiping off the assessee's trading liability as the assessee took the opportunity of wiping off liabilities by filing a criminal case against the bank. The criminal case against the bank employees would not alter the real character of the goods which were nothing but the stock of goods of the assessee. We find that a sum of Rs. 1,13,092 out of the amount received by the assessee from the bank has not been brought to tax. Hence we are of the opinion that in view of the provisions of section 41(1) of the Act, this amount could be brought to tax during the accounting year." The balance having been already brought to tax in 1959-60, the Tribunal held that Rs. 1,13,092 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee assessment years 1957-58 to 1959-60. That is why he observed portions of this liability remitted have already been considered against the losses incurred by the appellant ". This was clearly not correct, for the AAC passed his order on February 15, 1968, by which time already the assessments made for 1957-58 and 1958-59 had been set aside (on March 25, 1967, itself). Th Tribunal, in para. 4 of the statement of case, had pointed out this oversight on the part of the AAC; possibly it had not been brought to his notice that two of the earlier assessments had been set aside. The resultant position, therefore, is that the losses, to the extent of Rs. 1, 13,052, had been allowed in 1957-58 and 1958-59 and so the receipt of account year 1960-61 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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