LexCOMMISSIONER OF INCOME TAX, CALCUTTA versus SUGAULI SUGAR WORKS {P) LTD.
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COMMISSIONER OF INCOME TAX, CALCUTTA
.v.
SUGAULI SUGAR WORKS {P) LTD.
FEBRUARY 4, 1999
(M. SRINIVASAN AND U.C. BANERJEE, JJ.]
Income Tax Act, 1961 :
Section 41-Applicability of-Necessary condition for.
Assessee-Respondent-Private Limited Company-Assessment year
1965-66-Assessment of tevt-Assessee transferred a sum of Rs. 3,45,000 out
of the suspense account running from 1946-47 to 1948-49 to the capital reserve
· account-The Income Tax Officer found that an amount of Rs. 1,29,000 was
D with reference to the deposits and advances which had been paid back and
therefore he included a sum of Rs. 2,56,529 under Section 41 of the Income
Tax Act in the total income of the assessee-On appeal by assessee Appellate
Assistant Commissioner confirmed the Order of I.T.0.-Tribunal held
unilateral entry by assessee in the accounts transferring the amount to the
capital reserve account would not bring the matter within the scope of Section
E 41-0n reference Hifjt Court held in favour of assessee--Appeal before
Supreme Court-Held view taken by Hifjt Court is co"ect-Section 41 con-
templates the obtaining by the assessee of an amount either in cash or in any
other manner whatsoever or a benefit by way of remission or cessation and
it should be of a particular amount obtained by him-Thus, the obtaining by
F the assessee of a benefit by virtue of remission or cessation is sine qua non
for the application of this Section-The mere fact that the assessee has made
an entry of transfer in his accounts unilaterally will not enable the Department
to say that Section 41 would apply and the amount should be included in the
total income of the assessee--The question whether the liability is actually
lia"ed by limitation is not a matter which can be decided by considering the
G assessee's case alone but it is a matter which has to be decided only if the
creditor is before the concerned authori~n the absence of the creditor, it is
not possible for the authority to come to a conclusion that the debt is b~ed
and has become unenforceable-There may be circumstances which may
enable the creditor to come with a proceeding for enforcement of the debt
H even after expiry of the nonnal period of limitation as provided in the
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C.I.T. v. SUGAULI SUGAR WORKS (P) LTD.
401
Limitation Act.
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Commissioner of Income Tax v. General Industrial Society Ltd., (1994)
207 ITR 169; Commissioner of Income-Tax v. Jiajee Rao Cotton Mills Ltd.,
(1997) 227 ITR 860, held inapplicable.
Commissioner of Income-Tax v. Bennett Coleman & Co. Ltd., (1993)
B
201 ITR 1021, disapproved.
The Commissioner of Income-Tax Gujarat II, Ahmedabad v. M/s.
Bharat Iron & Steel Industries, Bhavnagar, (1993) Tax LR 188; J.K Chemicals
Ltd. v. Commissioner of Income-Tax, Bombay City II, (1966) 62 ITR 34,
approved.
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Kohinoor Mills Co. Ltd. v. CIT, (1963) 49 ITR 578, referred to.
Limitation Act, 1963 :
Debt-Recovery o[-f'eriod of limitation-Expiry of-Effect-Held does D
not extinguish the debt-Only prevent the creditor from enforcing the
debto~ere-entry in the books of accounts of the debtor made unilaterally
without any act on the part of the creditor will not enable the debtor to say
that the liability has come to an end.
Bombay Dyeing & Manufacturing Co. Ltd. v. The State of Bombay & E
Ors., [1958) SCR 1122; referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2344 of
1992.
From the Judgment and Order dated 7.4 .. 81 of the Calcutta High F
Court in I.T.R. No. 205 of 1976.
Ranbir Chandra, Rajiv Nanda, P. Parmeswaran and B.K. Prasad,
Advs. for the Appellant.
The following Order of the Court was delivered :
The respondent-assessee is a private limited company. In the
proceedings for assessment of tax for the year ending 30.6.1964 relevant to.
the Assessment year 1965-66, the assessee transferred a sum of Rs. 3,45,000
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out of the suspense account running from 1946-47 to 1948-49 to the capital
reserve account. The Income Tax Officer found that an amount of Rs. H
402
SUPREME COURT REPORTS
[1999) 1 S.C.R.
A 1,29,.000 was with reference to the deposits and advances which had been
paid back and he included a sum of Rs. 2,56,529 under Section 41 of the
Income Tax Act in the total income of the assessee. The assessee went on
appeal before the Appellate Assistant Commissioner and the <>rder of the
I.T.O. was confirmed. The assessee carried the matter to the Tribunal. Excerpt shown. Read the full judgment & AI analysis in Lexace.