TMI Blog2006 (6) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 41(1) provides for treating the assessment ( sic : cessation) of liability as income, provided those liabilities were claimed as deductions in computing the taxable income for earlier assessment years. It shows that section 41(1) is not creating any income as such independently without any basis. The profits and gains of the assessee were reduced to that extent in the earlier assessment years. When those liabilities ceased to exist, it is very necessary to write back the liabilities as a result of which the amount needs to be offered as income in the accounts under section 41(1). Therefore, there is no force in the argument of the revenue that the income deemed under section 41(1) stands alone differently and distinctly from the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st the order of the CIT(A)-IX at Mumbai dated 21-11-2002 and arises out of the assessment completed under section 143(3) r.w.s. 147 of the Income-tax Act, 1961. 2. The assessee is engaged in the business of manufacture and export of aluminium tubes, cans and other extrusion products, since 1957. In certain earlier assessment years, disputes arose between the assessee-company and the Central Excise department regarding the rate at which excise duty was payable on assessee s product. The assessee, on the basis of show-cause-cum-demand notices issued to it by the Central Excise department, claimed deductions of the disputed demands in its computations of income for the purpose of income-tax. The appellant s claims for such deductions were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment was completed accordingly. In first appeal, the CIT(A) agreed with the Assessing Officer and dismissed the appeal filed by the assessee. Therefore, the second appeal before us. 4. Two grounds have been raised by the assessee in this appeal. The first ground is regarding the validity of the reopening of the assessment under section 147. The second ground is regarding the computation of business profit for the purpose of section 80HHC inasmuch as whether the sum of Rs. 1,71,35,268 has to be excluded or not. 5. We heard Shri Arvind Sonde, the learned counsel appearing for the assessee. The learned counsel submitted that the assessee is not pressing the first ground regarding the validity of the reopening of assessment. 6. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bilities were to be nullified as the issue was decided by the Supreme Court in its favour. It is by operation of the statute that the amount of Rs. 1,71,35,268 has been brought to the profit loss account of the assessee-company. The said amount of profit was not generated out of the business activities carried on by the assessee-company during the relevant previous year, not to speak of any export activities. The learned departmental representative further submitted that the claim of the assessee is further hit by Explanation ( ba ) to section 80HHC(4C) whereby the receipts in the nature of section 41(1) have to be excluded to the extent of 90% in computing the business profits for the purpose of section 80HHC. 8. We considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofits and gains. The exclusion provided in the Act with reference to section 80HHC is provided under Explanation ( baa ) where the law directs to exclude 90% of certain receipts. Those amounts are the sum referred to in clauses ( iiia ), ( iiib ) and ( iiic ) of section 28 or of any receipts by way of brokerage commission, interest, rent charges or any other receipt of a similar nature included in such profit. Any other receipt of similar nature means receipt similar to brokerage, commission, interest, rent charges. The write back provided under section 41(1) for the purpose of nullifying the effect of earlier deductions claimed towards central excise liability is not a receipt similar to brokerage, commission, interest or rent charges. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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