1982 (7) TMI 8

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....s were made towards discharging the outstanding liability by the assessee in the assessment years 1957-58, 1965-66 and 1966-67, the total amount coming to Rs. 16,000 as against Rs. 51,130 outstanding at the end of S.Y. 2010. By release deed dated October 4, 1965, Bapuji Narayan & Co. accepted Rs. I 6,000 " in full and final settlement of the balance debt of Rs. 53,265 in view of the bad financial position of the second party "-Rs. 53,265 was the balance shown as outstanding in the account of the assessee with Bapuji Narayan & Co. With reference to the assessment year, the release deed was made in the assessment year 1966-67, i.e., S.Y 2021. The ITO took the view that the remission for the purposes of s. 41(1) of the Income-tax Act, 1961,....

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....ein, in Samvat year 2010 (relevant to the assessment year 1955-56) and not Samvat year 2021 (relevant to the assessment year 1966-67) ? (2) Whether, on the facts and in the circumstances of the case, the amount of Rs. 39,469 which represented the remission obtained by the assessee in respect of its trade debt as per the release deed. dated October 4, 1965, was includible under section 41(1) of the Income-tax Act, 1961, in computation of its assessable income for the assessment year 1966-67 ? " The answer to the second question will depend on what view we take on the first question. Mr. Sajnani appearing on behalf of the Revenue has contended that the Tribunal has wholly erred in reading the release deed to say that the remission was g....

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....at the end of S.Y. 202 1. The relevant part of the release deed reads as follows : " That the party of the first part has accepted Rs. 7,000, being the last instalment of Rs. 16,000 in full and final settlement of the balance debt of Rs. 53,265 in view of the bad financial position of the party of the second part. " The liability of which the assessee has been relieved is the liability to pay Rs. 53,265 and this has taken place in S.Y. 2021. There is nothing in the release deed to show that the release was indicated to be made effective in S.Y. 2010. Indeed, the recitals are to the contrary. Mr. Pandit appearing on behalf of the assessee, no doubt, sought to support the view of the Tribunal that the remission was given in S.Y. 2010....