1962 (10) TMI 58

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....1) of the Income-tax Act. 2. The assessee carried on business as a manufacturer of textile piece goods at all material times. Labourers and workmen had to be employed. Sometimes wages remained unclaimed. The assessee's practice up to 1952-53, admittedly, was to add back to the profits the wages unclaimed for more than three years. 3. On June 17, 1953, an Act called the Bombay Labour Welfare Fund Act (XL of 1953) was passed whereby all unclaimed wages were directed to be paid into the Bombay Labour Welfare Fund constituted under the said Act. 4. For the assessment year 1954-55, there were no unclaimed wages. In the assessment year 1955-56 (accounting year 1954), the assessee did not credit in its accounts any unclaimed wages bec....

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....at section 3(1) of Act 40 of 1953, in so far as it relates to unclaimed accumulation of wages, was unconstitutional and void. The Tribunal for the reasons set out in its order dated March 11, 1960, held that in the hands of the assessee the trading liability in respect of unclaimed wages could not be enforced by the workers and, as such, there was a cessation of the trading liability within the meaning of section 10(2A) of the Act. A copy of the Tribunal's order is annexed hereto as annexure "A" and forms part of the case. 9. From the facts stated above, the question that arises is:                "Whether, on the facts and circumstances of the case, was there a....

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.... 30,190 in the income of the relevant assessment year on the ground that the liability to pay the amount to labourers and workmen had ceased by reason of the expiry of the period of three years. The claim of the income-tax authorities was founded on section 10(2A) of the Act. The assessee objected to the inclusion of the said amount in its income. According to the assessee, the liability did not cease though the remedy to recover the amount of wages by the labourers and workmen may have become barred. The Tribunal did not accept this contention of the assessee; but, on the other hand, held that in the hands of the assessee the trading liability in respect of unclaimed wages could not be enforced by the workmen and as such there was a cessat....