TaxTMI 
TaxTMI 
2014 (10) TMI 706
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....A 795/2008 "Whether the Tribunal was correct in holding that the sum of Rs. 1,78,12,000/- received by the assessee as fixed deposit during the earlier assessment year was written off during the current assessment year under a settlement resulted in cessation of a liability in the ordinary course of the business of the assessee resulting in income liable to tax?" (ii) In ITA 794/2008 "Whether the second Appellate Tribunal was right in holding that a sum of Rs. 2,75,76,000/- received by the assessee as fixed deposit during the earlier assessment year was written off by forfeiture during the current assessment year under a settlement resulted in cessation of a liability in the ordinary course of the business of the asses....
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....this unpaid capital sum of deposits is nothing but the forfeited portion of the fixed deposit which was accepted by the assessee during the course of his business since forfeited amount is not payable to any of the persons and the assessee has become the owner of such amount, the same is taxable in the hands of the assessee. Receiving the deposit is the business of the assessee. Till the deposit is repaid, it will remain as liability and once part of the deposit only is repaid in full settlement, the balance amount which is forfeited by the assessee is nothing but a revenue receipt as it is accepted by the assessee during the regular course of banking business which is no longer required to be repaid. Therefore, the said amount was treated ....
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.... assessee and is liable to tax. Therefore, he submits the order passed by the tribunal is illegal and requires to be set-aside and the orders passed by the lower authorities requires to be restored. 6. Per contra, learned counsel appearing for the assessees submitted in the facts of the case, the assessee sustained loss in business, the assessee was unable to repay the amount received as deposit. Therefore, a settlement was arrived at wherein the depositors agreed to receive reduced amount in discharge of the liability and therefore, what was not paid to him is not the amount which is either forfeited by the assessee or is available at his hands to be charged as income under the Act. He relies on the Judgment of this Court and various ot....
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....ect might, in certain circumstances have been made in the books of account, it would not constitute income for the purpose of levy of tax. In other words, income means real income and not fictional one. This involves really two aspects. One is that the receipt should connote a real or tangible coming and not something notional or fictional. A rebate obtained by the purchaser or remission of debt by a creditor would not result in the creation of income in the hands of the purchaser or debtor. As in those instances the assessee does not receive any income to his nets though by such rebate or remission he is benefited to the extent of the rebate or remission. 8. Similar view has been taken by the Madras High Court in the case of ISKRAEMECO ....
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....SONS LTD. ((1996) 222 ITR 344 (SC) the money was received by the assessee in the course of carrying on his business although it was treated as deposit and was of capital nature, at the point of time it was received by efflux of time the money has become the assessee's own money. What remains after adjustment of the deposits has not been claimed by the customers. The claims of the customers have become barred by limitation. The assessee itself has treated the money as its own money and taken the amount to its profit and loss account. There was no explanation from the assessee while the surplus money was taken to its Profit and Loss Account even if it was somebody else's money. In that context, it was held when the claim of the customer becam....