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TMI Blog2012 (4) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny assessment for which a notice under Section-143(2) of the Act was issued and thereafter notice under Section-142(1) of the Act was issued upon the assessee. 2.2. The Assessing Officer after taking into consideration the evidence and material on record vide assessment order dated 30/12/2005 determined total income of the assessee at Rs. 32,72,429/-. While passing the assessment order, the Assessing Officer added Rs. 18,72,697/- on account of sundry creditors under Section-41(1)(a) of the Act. 2.3. The assessee being dissatisfied by the said order dated 30/12/2005 passed by the Assessing Officer, preferred appeal against the same before the Commissioner of Income Tax (Appeals)-I, Surat. The CIT (Appeals) vide order dated 27/02/2006 partly allowed the appeal of the assessee and deleted addition of Rs. 18,72,697/- made by the Assessing Officer under Section-41(1)(a) of the Act. 2.4. The Revenue feeling aggrieved and dissatisfied by the order dated 27/02/2006 passed by the CIT (Appeals) preferred appeal before the Income Tax Appellate Tribunal, Ahmedabad. The Appellate Tribunal confirmed the order passed by the CIT (Appeals) so far as deleting the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of this High Court in the case of CIT vs. Silver Cotton Mills Company Ltd., reported in 254 ITR 728 (Guj.) and CIT vs. Bharat Iron and Steel Industries, reported in 1999 ITR 67 and the judgment of the Apex Court as well in case of CIT vs. Sugauli Sugar Works Pvt. Ltd., reported in 236 ITR 518. Learned Senior Standing Counsel Ms. Bhatt contended that the Tribunal below has committed a substantial error of law in holding that Section-41(1) of the Act was not applicable from the materials on record. 9. In order to appreciate the aforesaid questions, it will be profitable to refer to the provisions contained in Section-41(1) of the Act which is quoted below: "41. Profits chargeable to tax.- [(1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the first-mentioned person) and subsequently during any previous year,:- (a) the first-mentioned person has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The following passages in the judgment brings out of the reasoning of the Full Bench succinctly (At Pp. 195 and 196 of Tax LR): "11. In our opinion, for considering the taxability of amount coming within the mischief of S. 41(1) of the Act, the system of accounting followed by the assessee is of no relevance or consequence. We have to go by the language used in S. 41(1) to find out whether or not the amount was obtained by the assessee or whether or not some benefit in respect of trading liability by way of remission or cessation thereof was obtained by the assessee and it is in the previous year in which the amount or benefit, as the case may be, has been obtained that the amount or the value of the benefit would become chargeable to income-tax as income of that previous year. "12. We fully agree with the view taken by the Division Bench in CIT v. Rashmi Trading, 1977 Tax LR 520 (Gujarat) (supra) that the only meaning that can be attached to the words "obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure" incurred in any previous year clearly refer to the actual receiving of the cash of that amount. The am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the income of the previous year wherein such benefit was obtained. The High Court, agreeing with the Tribunal, rightly held that the resort to Section 41(1) could arise only if the liability of the assessee can be said to have ceased finally without the possibility of reviving it. On the facts found by the Tribunal, the Tribunal as well as the High Court were well justified in coming to the conclusion that the purchase tax liability of the assessee had not ceased finally during the year in question. Despite the finality attained by the judgment in Neroth Oil Mills' case, the other issues having bearing on the exigibility of purchase tax still remained and the dispute between the assessee and the sales-tax department was still going on. There is no material on record to rebut these factual observations made by the Tribunal. Nor can it be said that the reasons given by the Tribunal are irrelevant. The learned senior counsel appearing for the Income-tax Department has contended that the assessee itself took steps to write-off the liability on account of purchase tax by making necessary adjustments in the books, which itself is indicative of the fact that the liability c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed." 14. As pointed out in the case of Sugauli Sugar Works (P) Ltd. (supra), vide the last five lines of the paragraph-6 of the judgment, the question whether the liability is actually barred by limitation is not a matter which can be decided by considering the assessee's case alone but has to be decided only if the creditor is before the concerned authority. In the absence of the creditor, it is not possible for the authority to come to a conclusion that the debt is barred and has become unenforceable. There may be circumstances which may enable the creditor to come with a proceeding for enforcement of the debt even after expiry of the normal period of limitation as provided in the Limitation Act. 15. We, thus, find that the view taken by the Tribunal is absolutely consistent with the one taken by the Supreme Court in the case of Sugauli Sugar Works P. Ltd. (supra) and other decisions which have been referred to in the judgment. We do not find any error much less an error of law in the judgment and order of the Tribunal. 16. In absence of substantial question of law arising in this appeal, the appeal deserves to be dismissed and is accordingly dismissed in lim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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