Sales tax refund taxed as income on receipt under section 41(1), with no referable question of law arising.

Sales tax refund received during the previous year was treated as taxable income in the year of receipt under section 41(1) of the Income-tax Act, 1961, after accounting for amounts returned to customers. The Kerala High Court noted that an earlier binding Bench decision on substantially similar facts had already settled the issue and applied section 41(1). On that basis, it held that no referable question of law arose under section 256(2). The request for reference therefore failed, and the original petition was dismissed.

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Issues: Whether the sales tax refund received by the assessee was taxable under section 41(1) of the Income-tax Act, 1961, and whether any referable question of law arose for reference under section 256(2) of the Income-tax Act, 1961.

Analysis: The assessment year in question was 1977-78. The assessee had received a refund of sales tax during the previous year, after deducting amounts returned to customers. The Court noted that an earlier Bench decision had already held, on substantially similar facts, that such sales tax refund is income of the year in which it is received and that section 41(1) applies. In view of that binding precedent, the Court found that the issue stood concluded and that no referable question of law arose.

Conclusion: The sales tax refund was held to be taxable under section 41(1) of the Income-tax Act, 1961, and the request for reference failed.

Final Conclusion: The original petition was held to be without merit and was dismissed, leaving the Revenue's position undisturbed.

Ratio Decidendi: A sales tax refund received in the accounting year is taxable as income of that year under section 41(1) when the issue is covered by binding precedent on substantially similar facts.

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