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TMI Blog2010 (7) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... 8:- "Whether on the facts and in the circumstances, the Appellate Tribunal was right in law in deleting the addition made on account of receipt of Excise Duty Refund when the provisions of section 41(1) read with section 43B of the Income-tax Act, 1961 are applicable in the case of the assessee?" 2. The facts as noticed in the statement of case are that the assessee filed its return on 30.7.1987 declaring net loss at Rs.3,28,179/-. During the course of assessment proceedings, the Assessing Officer observed that the assessee had credited a sum of Rs.17,73,999/- in the suspense account and the said amount was refund of custom duty (wrongly mentioned as excise tariff by ACIT) which was charged to profit and loss account in the earlier years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reliance upon the judgment of the Apex Court in Polyflex (India) Pvt. Ltd. v. Commissioner of Income-tax, 257 ITR 343. Learned counsel further submitted that the reliance of the Tribunal on the Apex Court judgment in Hindustan Housing & Land Development Trust Limited's case (supra) was misplaced. According to the learned counsel, once the liability had ceased during the previous year relating to the assessment year in question, the same was exigible to tax. 5. We have considered the submission of the learned counsel for the revenue. We find force in the submission made by the learned counsel for the revenue. 6. Section 41 (1) of the Act as it stood at the relevant time reads thus:- "41. Profits chargeable to tax- (1) Where an all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sub-section (1) comes into play. Accordingly, the amount obtained by the assessee or the value of benefit accruing to him is deemed to be profits and gains of business or profession and it becomes chargeable to income-tax as the income of that previous year." 8. The issue in Polyflex (India) Pvt. Ltd's case (supra) before the Hon'ble Supreme Court was similar as in the present case. The assessee therein had claimed deduction on account of payment of excise duty in the year 1986. However, in the assessment year 1989-90, excise duty amounting to Rs.9,64,206/- was refunded by the Department which was brought to tax by invoking provisions of Section 41 (1) of the Act. The plea of the assessee was that there was no remission or cessation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. Ltd. v. CIT [1971] 82 ITR 363, wherein this court held that the amount of sales tax paid or payable by the assessee is an expenditure within the meaning of section 10 (2) (xv) of the Act. We are inclined to think that in a case where a statutory levy in respect of goods dealt in by the assessee is discharged and subsequently the amount paid is refunded, it is the first clause that more appropriately applies. It will not be a case of benefit accruing to him on account of cessation or remission of trading liability. It will be a case which squarely falls under the earlier clause, namely, "obtained any amount in respect of such expenditure". In other words, where expenditure is actually incurred by reason of payment of duty on goods and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany were compulsorily acquired by the Government. Award was announced by the Land Acquisition Collector granting Rs.24,97,249/- as compensation and thereafter arbitrator had fixed the quantum of compensation at Rs.30,10,873/-. State Government had challenged the award of the arbitrator by filing an appeal before the High Court and during the pendency of the said appeal, an amount of Rs.7,36,691/- deposited by the Government in that appeal was allowed to be withdrawn by the company on furnishing a security bond which was credited by it in its books of accounts. The question then arose in that case was whether this amount which was received by the company in pursuance to the arbitrator's award which was in dispute in appeal filed by the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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