1986 (10) TMI 28

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.... a reference under section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue to answer the following question of law: "Whether, on the facts and in the circumstances of the case, and on the weight of the entire record, the Tribunal was justified in holding that there was no cessation of liability of the assessee-company in respect of the two amounts, namely, Rs. 16,336 and Rs. ....

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....ncome-tax (Appeals) also failed. However, the Tribunal accepted the assessee's contention that these amounts could not be deemed to be profits and gains of business in order to be taxable under section 41(1) of the Act. This view was taken on the basis that these amounts representing the unclaimed wages and bonus, though time-barred, had not resulted in either remission or cessation of the trading....

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....g liability of the assessee in such cases, since there is neither any unilateral act of the creditor amounting to remission nor any bilateral act of the parties resulting in the liability ceasing to exist in law, merely because the recovery of the same has become time-barred. It has also been held in these cases that the mere fact that the assessee has not shown such an amount as his trading liabi....

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....n of the Allahabad High Court in Indian Motor Transport Co. v. CIT [1978] 114 ITR 677 (All). In our opinion, this decision of the Allahabad High Court cannot be construed as taking a contrary view on account of the fact that this too is a decision by the Division Bench like the earlier decision and, therefore, it is reasonable to assume that a subsequent Division Bench of the same High Court would....