1985 (3) TMI 98

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....9 from the profit and loss account. On appeal by the assessee, the CIT(A), following the judgment of the Calcutta High Court in the case of CIT vs. Sugauil Sugar Works (P) Ltd. (1981) 23 CTR (Cal) 226 : (1983) 140 ITR 286 (Cal), allowed the said claim of Rs. 12,409 to be deducted from the profits. The Department is now aggrieved by the extent of the amount of Rs. 10,193 which, according to it, should have been treated as deemed income of the assessee under s. 41 of the IT Act, 1961 (for brevity the Act). 2. Details of the said amount of Rs. 10,193 are as under: Accounting period Particulars . Amount Sum total 1971-72 Royalty : Distt. Mining Officer Chaibasa, Bihar . 1,222.00 . . Dead Rent, Surface Rent....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....he very fact that they pertain to the old period indicate that they do not in reality exist. 4. Learn representative for the assessee. On the other hand, placed reliance upon CIT vs. Sugauli Sugar Works (P) Ltd., and contended that the liabilities could not be terminated by unilateral act of the assessee of writing them off in the accounts and they still existed. 5. Sec. 41(1) of the Act has been summarised by the Hon'ble Calcutta High Court in the case of CIT vs. Sugauli Sugar Works (P) Ltd. in the following words: "This sub-section applies: (1) to sums received in cash or in any other manner whatsoever in respect of loss or expenditure which had once been allowed or deducted in the computed profits in any previous year, (ii) to t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....te that there is no likelihood of their claim by the creditors. However, the possibility that the claim may be made in foreseeable further by the creditor cannot be altogether ruled out to these reasons, an investigation is respect of which allowance or deduction has already been made in the earlier assessments still in fact exists. There may be cases in which either the liability does not in fact exist or whatever had existed was already written off by the creditor. Take an example that certain liabilities are outstanding in the account books of an assessee debtor, whereas in the account books of the creditor no dues by the assessee debtor to him are outstanding. In such a situation, there cannot be any occasion for the creditor of the ass....