2001 (9) TMI 93

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....esented the bill of lading for collection of the value of goods to the United Asian Bank in Malaysia. That bank in Malaysia on its turn sent the bill of lading to the United Bank of India, Foreign Branch, Bombay, for realisation of the amount of U. S. dollars 3,64,658.84, equivalent to Rs.32,38,133. The United Bank of India asked the respondent-firm to clear the bill of lading by making payment of the above amount and the date of maturity was mentioned by the bank as November 24, 1977. The respondent firm, however, paid Rs.17,87,859 in instalments and could not pay the balance of Rs.14,26,116. In the meantime, the respondent firm approached the shipping agent, J. N. Baxi and Co., Bombay, and managed to get a release of the goods by giving a....

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....erial, stood substituted by the shipping agent, because, the shipping agent had paid the amount to the Malaysian bank by taking over the liability to realise that amount from the respondent firm. It was the case of the respondent that the very fact that the shipping company had filed a suit for realisation against the respondent firm, would go to show that the liability was kept alive and the same had not been remitted. According to the respondent, even if the suit is time barred, even then the liability would not stand remitted. The Assessing Officer, however, did not agree with the respondent firm and ordered the addition of the aforesaid amount in the total income of the respondent under section 41(1) of the Income-tax Act, 1961 (here....

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....(1) of the Act was dismissed by the Tribunal, vide order dated May 20, 1998. It was held that the proposed question was not a question of law and had not arisen from the decision of the Tribunal. Hence, the present appeal by the Revenue under section 256(2) of the Income-tax Act, 1961. The Revenue has lost before three courts, as mentioned above. According to us, if there was a liability outstanding, the respondent firm was well within its right to exclude that amount. This is a pure question of fact as to whether liability existed or not. The balance-sheet of the respondent-assessee for the relevant year showed the liability of the aforesaid amount against the firm which had supplied the material. According to us, it will not make any d....