TMI Blog2002 (2) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... the credits which were made during the business by some customers of the erstwhile company which the present assessee had taken over. The total of such credit balance came to the above amount and the assessee-company treated this as the unclaimed amount by those parties, transferred this amount to the general reserve. In the return submitted, it was claimed that an amount of Rs. 1,77,886 being the balance due to printers, block makers and souvenir publishers by the erstwhile firm of Aries Advertising Bureau outstanding for more than three years has been transferred to general reserve since these amounts have remained unclaimed for a long period of time. In short, what had happened was that though initially these were the deposits or credits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the expiry of the limitation period only deprives the creditor of his remedy to institute the suit in a court of law but, the indebtedness nevertheless continued and as such there was no cessation of liability and therefore, such amount could not be brought to tax under section 41(1) of the Act. The appeal was thus allowed on that question. This finding of the appellate authority in favour of the assessee was challenged by the Revenue before the Income-tax Appellate Tribunal. However, the Income-tax Appellate Tribunal declined to interfere and dismissed the appeal. It felt that the appellate authority had followed a binding decision of this court cited supra and that the Department only wanted to keep the matter alive. It is under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the capital employed in the business." Therefore, it would have to be held that once the assessee transferred this amount to the general reserve, it treated the same as the profit. Once this position is clear, then the further question remains as to whether the amount such as above becomes the income of the assessee in its hand. That question no more remains res integra. The Supreme Court in the case of CIT v. T. V. Sundaram Iyengar and Sons Ltd. [1996] 222 ITR 344 has concluded this question as also the claim of the assessee that these amounts which were in the nature of deposits or credits did not change their character and could not be said to be an income in the hands of the assessee. The Supreme Court, by majority, has answered the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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