1978 (3) TMI 88

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.... come forward to demand payment of the amounts due to them and consequently their accounts were debited and correspondingly the profit and loss account of the assessee was credited. This was done on 31st March, 1970, which fell in the assessment year 1970-71. The Income-tax Officer found that the assessee had credited the above amounts to the profit and loss account when they remained unclaimed for a number of years and there was no hope of these being claimed. The assessee has itself claimed the sums as its income. Hence, the same is liable to tax. He included the sum of Rs. 24,869 to the income of the assessee. The assessee went up in appeal. The Appellate Assistant Commissioner held that though the concerned persons had not come forwa....

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....he materials on record was that the assessee itself treated the amounts in question to be its income which accrued to it on 31st March, 1970. Learned counsel appearing for the assessee invited our attention to the principles laid down in Bhagwat Prasad and Co. v. Commissioner of Income-tax [1975] 99 ITR 111 (All). In that case, it was held that section 41 of the Income-tax Act would apply if two conditions are satisfied, (1) that the amounts must have been allowed as a deduction in some earlier year ; and (2) that during the assessment year in question the assessee must receive some benefit by way of cessation or remission of liability. On facts, there is no difficulty in holding that both these conditions are satisfied in the present ca....

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....i Cotton Mills (P.) Ltd. v. Commissioner of Income-tax [1971] 81 ITR 400 (All). This case is distinguishable on facts. There the amount in question was held not to belong to the assessee at all. It was in the hands of the assessee as trust money which never altered its character. No such problem arises in the present case. The decision in Gannon Dunkerley and Co. Ltd. v. Commissioner of Income-tax [1976] 102 ITR 428 (Bom) is also distinguishable. There the amounts in question were transferred from the unclaimed balances account to the assessee's reserve for taxation account. It was found that the assessee made payments from the reserve for taxation account as and when the creditors made claims. It is clear that the assessee never claimed....