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2013 (10) TMI 68 - HC - Income TaxReassessment - Notice u/s 148 for making additions u/s 41(1) - the assessee was collecting the amount towards excise duty by way of security as there was dispute of classification of goods - Interest on fixed deposits made out of security deposits in the form of excise duty collected were offered for taxation – Held that:- A provisional assessment was made in pursuance to which the assessee started depositing the amount collected as excise duty from customers and offerred the same as security to the Central Excise Department. He offerred interest on the deposit to tax. The dispute was ultimately resolved in the year 2000 in which he was liable to pay Rs.26,39,484/-. The assessee thereafter started returning excise duty to the persons from whom they were collected and the remaining amount to tax in the assessment year 2004-05. In the circumstances, it cannot be said that the assessee was allowed any allowance or deduction in the assessment year in question in respect of expenditure or trading liability incurred by the assessee. Every security in pursuance to provisional assessment in respect of which final assessment were passed and in which amount collected were offerred as security by way of FDs to collect excise duty would not fall within the meaning of trading liability incurred by assessee, thus provision of Section 41 (1) is not applicable. There was no nexus between reasons recorded in formation of belief from the facts emerging in the case, the jurisdiction for framing reassessment under Section 147 - decided against the revenue.
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