TaxTMI 
TaxTMI 
TaxTMI 
1967 (1) TMI 2
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.... used to carry on business as selling agent of Messrs. Mohanlal Hargovinddas of Jabalpur under the name and style of " Messrs. Hukumchand Mohanlal ". On or about 17th February, 1960, Kanhaiyalal died. His widow, Hira Laxmi, succeeded to the business of selling agent carried on by her husband and continued it under the same name and style, namely, " Messrs. Hukumchand Mohanlal "The firm of Mohanlal Hargovinddas had recovered from Kanhaiyalal an amount of Rs. 24,341 as sales tax for transactions effected during the period from 26th January, 1950, to 31st March 1951. Kanhaiyalal was allowed deduction on account of this amount of sales tax paid by him in the relevant assessment year. Subsequently, when the Assistant Commissioner of Sales Tax, J....
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....asons for allowing the assessee's appeal. It first stated the argument of counsel appearing for the assessee thus : The principal point made by Shri S. P. Mehta, who appeared for the assessee before us was based on the wording of section 41(1) of the 1961 Act, which corresponds to section 10(2A) of the 1922 Act. He contended that these sections create an artificial liability of the assessee and that, therefore, they have to be construed strictly. He said that, but for these sections, the amount of Rs. 24,341 in the present case would not have been the income of the assessee. If, therefore, section 41(1) is to be applied, the chargeability arises if the allowance of deduction had been made in an earlier assessment in respect of expenditure....
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....nefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by him or the value of benefit accruing to him, shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not. " Under the general law, once a trading liability has been allowed as a business expenditure and if this liability is remitted in any subsequent year, the amount remitted cannot be taxed as the income of the year of remission ; nor can the account for the year in which the liability was allowed be reopened and adjuste....
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....tax or super-tax or any other sum of money is payable under this Act, and includes-- "(a) every person in respect of whom any proceeding under this Act has been taken for the assessment of his income or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person ; (b) every person who is deemed to be an assessee under any provision of this Act ; (c) every person who is deemed to be an assessee in default under any provision of this Act. " Even if the word " assessee " as used in section 41(1) for the second time is taken to have the meaning given by the aforesaid definition, the question would still remain ....
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....shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased. " It will be seen that under this provision the liability of a legal representative is only for the payment of that sum which " the deceased would have been liable to pay under the Act if he had not died " and in the like manner and to the same extent as the deceased. A similar provision occurred in section 24B of the Income-tax Act, 1922. In construing that provision the Supreme Court said in Commissioner of Income-tax v. Amarchand N. Shroff and Commissioner of Income-tax v. James Anderson, that section 24B did not authorise the levy of tax on receipts by the legal representative of....
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..... Shri Adhikari, learned counsel appearing for the department, relying on sub-section (3) of section 159 urged that the amount of Rs. 24,341 could be taxed in the hands of Hira Laxmi under section 41(1). We are unable to accept this contention. Sub-section (3) of section 159 no doubt says that " the legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee. " But this provision read with section 2(7) defining the term " assessee " is not sufficient by itself to fasten liability on Hira Laxmi under section 41(1). Unless there is some provision in the Act providing that the amount remitted and received by the legal representative of an assessee to whom an allowance had already been granted shall be....