TaxTMI 
TaxTMI 
TaxTMI 
2002 (3) TMI 208
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....e date of filing relevant income-tax return under section 139(1) of the Income Tax Act (hereinafter referred to as 'the Act'), the assessee paid only Rs. 5,17,94,551. The difference between these two amounts i.e. Rs. 59,10,627 represented the customs duty remaining unpaid and liable to be disallowed under section 43B of the Act. Accordingly, this amount of Rs. 59,10,627 was offered for disallowance, in computation of assessable income filed by the assessee alongwith the income-tax return itself, under section 43B. On the basis of these details filed by the assessee, the Assessing Officer inter alia disallowed the aforesaid amount of Rs. 59,10,627. On 25th July, 1991, i.e. on a date falling in the next previous year which is relevant to the assessment year in appeal before us, there was a reduction in custom duty rates and, therefore, the assessee decided to write back an amount of Rs. 58,80,502 out of the aforesaid outstanding custom duty liability of Rs. 59,10,627. This amount was accordingly written back as 'provision for custom duty, on imported zinc concentrates no longer required'. It is not in dispute that the amount so written back was included in Rs. 92.52 lakhs shown as 'O....
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....to mistake apparent from records the same is rectified as below: -- Assessed income under section 154 dated 31-3-1995 Rs. 5,72,66,207 Add: Custom Duty written back Rs. 58,80,502 --------------- Revised total income Rs. 6,31,46,709  ....
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....since the cessation of liability took place in the current previous year, as a result of which the provision was written back, the aforesaid amount representing cessation of liability with respect to the custom duty is taxable in the assessment year 1992-93, under section 41(1) of the Act. It is contended that the assessee itself has taken the cessation of custom duty liability in its income and, therefore, there was no valid reason for excluding the same from taxable income. According to learned DR, Assessing Officer was not at all justified in allowing deduction of Rs. 58,80,502 while computing the assessable income. It was submitted that such a deduction was not allowable under any provisions of the Act. Reliance was placed on the order under section 154 passed by the Assessing Officer. We were thus urged to vacate the order of the CIT(A) and restore that of the Assessing Officer. Learned counsel for the assessee, on the other hand, has submitted that the question of taxability under section 41(1) arises inter alia when an allowance or deduction has been made in the assessment for any earlier year in respect of expenditure incurred by the assessee liability in respect of which h....
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....ct of such trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax @s the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not; or (b) (not being reproduced as the same is not relevant for our purposes.) 10. The above legal provision makes it clear that where a person has obtained, in any manner whatsoever, any amount, in respect of inter alia an expenditure, by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of the business, provided such an expenditure has been allowed as a deduction in any year. It is a sine qua non, for bringing a remission or cessation of liability to tax under section 41(1), that "an allowance or deduction has been made in the assessment for any year" for loss, expenditure or trading liability in respect of which such remission or cessation has been made. A fortio....