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Commissioner of Income Tax Vs. Rex Commercial Corporation Private Limited. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberI.T. Appln. No. 56 of 1983
Reported in(1985)45CTR(Bom)177
AppellantCommissioner of Income Tax
RespondentRex Commercial Corporation Private Limited.
Excerpt:
.....by taking recourse to the provisions of section 438 of the code by approaching the court of session or the high court for such relief. thus, during the course of investigation of a criminal case, an accused is not remediless and that would further buttress the above view. [jagannath singh v dr. ajay upadyay & anr 2006 cri lj 4274; 2006 (5) air bom r held per incuriam]. - 41(1) of the it act, the answer must be clearly against the department in view of the decision of this court in cit, bombay city-iv v......act, 1961, there must be a remission or cessation of the liability in respect of the amount. the benefit contemplated by the section must be by way of 'remission or cessation of liability' and no other benefit is contemplated. the transfer of an entry in the accounts is a unilateral act and does not bring about the cessation of the liability of the debtor. hence the appropriation of an amount by reversal of the entry in p&l; a/c for the year concerned cannot be brought to tax as a benefit contemplated by s. 41(1) of the said act. as far as the question pertains to s. 28(iv) of the it act, apart from the fact that apparently that section has no application to the facts of the case, no such contention appears to have been advanced before the tribunal.2. in view of this, rule is.....
Judgment:

: M. H. Kania, J. - This is an application under s. 256(1) of the IT Act, 1961. Only one question is sought to be directed to be referred to this court for its opinion in this application. As far as the said question pertains to s. 41(1) of the IT Act, the answer must be clearly against the department in view of the decision of this court in CIT, Bombay City-IV v. Sadabhakti Prakashan Printing Press (P) Ltd. It was held in that case that in order that an amount may be income under s. 41(1) of the IT Act, 1961, there must be a remission or cessation of the liability in respect of the amount. The benefit contemplated by the section must be by way of 'remission or cessation of liability' and no other benefit is contemplated. The transfer of an entry in the accounts is a unilateral act and does not bring about the cessation of the liability of the debtor. Hence the appropriation of an amount by reversal of the entry in P&L; A/c for the year concerned cannot be brought to tax as a benefit contemplated by s. 41(1) of the said Act. As far as the question pertains to s. 28(iv) of the IT Act, apart from the fact that apparently that section has no application to the facts of the case, no such contention appears to have been advanced before the Tribunal.

2. In view of this, rule is discharged with no order as to costs.


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