By K. B. Bhujle, Advocate
New Page 2
40 Deemed income : S. 41(1) of Income-tax
Act, 1961 : A.Y. 1989-90 : Assessee continued to show amount in question as
liability in balance sheet : CIT set aside the assessment u/s.263 on the ground
that proper enquiry of assessability u/s.41(1) not made : Not justified.
[CIT v. Tamil Nadu Warehousing Corporation, 170 Taxman
123 (Mad.)]
After the completion of the assessment u/s.143(3) of the
Income-tax Act, 1961 the Commissioner set aside the assessment order exercising
powers u/s. 263 on the ground that the assessee had surrendered the Group
Gratuity Scheme to the LIC and received certain amount; and that while
completing the assessment, the Assessing Officer had not made any proper enquiry
with respect to assessability of the said sum and directed the AO to assess the
said amount u/s.41(1). The Tribunal cancelled the order of the Commissioner
passed u/s.263.
On appeal by the Revenue, the Madras High Court upheld the
decision of the Tribunal and held as under :
“(i) From the reasoning given by the Tribunal, it was clear
that the assessee had continued to show the admitted amount as a liability in
the balance sheet. The undisputed fact was that it was a liability reflected
in the balance sheet. Once it was shown as a liability by the assessee, the
Commissioner was wrong in holding that the same was assessable u/s.41(1).
Unless and until there is a cessation of liability, S. 41 will not be pressed
into service.
(ii) Thus the reasoning given by the Tribunal was based on
valid materials and evidence and, hence, there was no error or legal infirmity
in the order of the Tribunal so as to warrant interference.”
