TMI Blog2004 (8) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Act, 1961?" - IT Ref. No. 120 of 1982 IT Ref. No. 121 of 1982 - - - Dated:- 31-8-2004 - Judge(s) : N. K. SUD., S. S. GREWAL. JUDGMENT The judgment of the court was delivered by N.K. SUD J. - This order will dispose of Income-tax References Nos. 120 and 121 of 1982, arising out of the order of the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short "the Tribunal"), dated March 23, 1982, relating to the assessment year 1977-78. In Income-tax Reference No. 120 of 1982, the following question of law has been referred for the opinion of this court, at the instance of the Revenue: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal erred in law in allowing the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itors were paid off by the assessee only to the extent of 50 percent, due to each of them. The balance 50 per cent, amount of Rs. 5,80,884 was remitted by the creditors in favour of the assessee. After giving an opportunity to the assessee of being heard, the Income-tax Officer treated the amount of Rs. 5,80,884 as income representing remission or cessation of liability within the meaning of section 41(1) of the Income-tax Act, 1961 (for short "the Act"). For the assessment year 1976-77, there was an unabsorbed depreciation of Rs. 20,392 determined by the Income-tax Officer. During the course of assessment proceedings for the year under consideration, the assessee made a claim before the Income-tax Officer that the said amount of Rs. 20,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctory v. CIT [1991] 189 ITR 512 (SC). Accordingly, the question is answered in the negative, i.e., in favour of the assessee and against the Revenue. As far as the question in Income-tax Reference No. 121 of 1982 is concerned, the facts are not in dispute. The assessment for the year 1976-77 had been made vide order dated January 23,1979, at a net loss of Rs. 5,29,332 before allowance of depreciation. This was based upon the profit and loss account in which deduction on account of purchases included the purchases of Rs. 11,61,768.06 made from the 52 creditors. The loss was duly allocated to the partners to be considered in their personal assessments. Since the payments of Rs. 11,61,768.06 had not been made to the 52 creditors during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(1) of the Act. In order to appreciate the contention of the assessee, reference may be made to the provisions of section 41(1) of the Act, which reads as under: "(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, and subsequently during any previous year the assessee 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 remission or cessation thereof, the amount obtained by him or the value of benefit accruing to him, shall be deemed to be profits and gains of business or profession and accordingly charge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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