TMI Blog2003 (12) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... ay consider the issue appropriately in accordance with law. He has cited CIT v. T.V.S. Iyengar Sons Ltd. [1996] 222 ITR 344 (SC). He has also contended that the subsequent two judgments of Honourable Supreme Court are in favour of assessee, no doubt, but the same should not be preferred for the reasons that in the case of TVS Iyengar Sons Ltd., the judgment has been rendered by a Bench of three judges, whereas in the subsequent two cases/decisions, the judgments have been rendered by two judges Bench of the Honourable Supreme Court. As against the above, the learned AR of assessee has contended that in the latter judgments, the Honourable Supreme Court has taken the view in favour of the assessee. He has cited following decisions in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat following words in section 41(1) are important:- "the assessee had 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" 14. The Honourable Supreme Court thus held that the obtaining of an amount either in cash or in any other manner or a benefit by way of remission or cessation of a trading liability was necessary for applying the provisions of section 41(1). The Honourable Supreme Court also observed that the principle that on expiry of the period of limitation only the remedy available to creditor for enforcing debt was extinguished but the debt itself w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt and held as under:- "that where a statutory levy is discharged by the assessee and subsequently the amount paid is refunded, it will be a case where the assessee 'has obtained any amount in respect of such expenditure' within the meaning of section 41(1) of the Act, 1961; it will not be a case of "benefit by way of remission or cessation' of a trading liability. Where expenditure is actually incurred by reason of payment of duty on goods and the deduction or allowance is given in the assessment of an earlier period, the assessee is liable to disgorge that benefit as and when he obtains refund of the amount so paid. Whether there is a possibility of the refund being set at naught on a future date is not a relevant consideration. Once th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , whether by way of cessation or remission of liability or by way of obtaining any benefit in cash or kind. In this judgment, it has been held that it is only on the fulfilment of the aforesaid pre-condition that the chargeability to tax as provided in section 41(1), can be applied. 19. Obvious as it is, from our above discussion, there does not appear to be any direct clash between the judgment reported in TVS Iyengar Sons' case and that reported in Sugauli Sugar Works (P.) Ltd's case so as to impel us to proceed to make an exercise of opting between the two and in that context to consider the learned DR of revenue's contention of preferring a three judge Bench judgment of the Honourable Supreme Court to that of two judge Bench judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit of business and, in turn, assessee's taxable income. Distinguishably from the said judgment, Polyflex (India) (P.) Ltd.'s case deals with a statutory liability, which, on being discharged by the assessee, forms assessee's business expenditure eligible for deduction. The ratio decidendi of this judgment is that when after an assessee has paid off his statutory liability, (being excise duty in the cited case) and claimed deduction in respect thereof, the sum is refunded to assessee (may be under judicial adjudication) the same is to be treated as assessee's deemed profit chargeable to tax under section 41(1). The Honourable Supreme Court has propounded that such a situation (being of receipt of amount in respect of expenditure) is quit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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