AIR 2002 SUPREME COURT 3145 ::2002 AIR SCW 3630 ::2002 AIR - Kant. H. C. R. 2407 ::2003 TAX. L. R. 95 ::(2002) 177 CurTaxRep 93 ::2002 (7) SCC 188 ::2002 (6) Scale 230 ::(2002) 6 Scale 231 ::2002 (257) ITR 343 ::(2002) 4 SCJ 168 ::(2002) 124 Taxman 373 ::2002 (3) LRI 802 ::2002 (171) Taxation 183 ::2002 (5) SLT 171 ::2002 (6) Supreme 210 ::(2002) 6 JT 528 (SC) ::2002 (9) SRJ 61

Supreme Court Of India

(From : (2001) 251 ITR 527 (Kant))

Hon'ble Judge(s): S. Rajendra Babu, K. G. Balakrishnan, P. Venkatarama Reddi , JJJ

Income-Tax Act (43 of 1961) , S.41(1)— Excise duty refund - Whether chargeable to tax as profits and gains of business - Levy of excise duty challenged in appeal and held illegal - Excise duty was refunded to assessee - Excise dept. filed SLP before Supreme Court which remains pending determination - Amounts refunded to assessee are amounts received by assessee in respect of expenditure incurred by reason of payment of excise duty - Refunded amount forms part of deemed income and liable to be taxed under S. 41(1) - Not a case of benefit accrued on account of or cessation of trading liability. V. T. Audyogik Sahakari Mandli v. CIT, 2000 Tax LR 804 (Guj) and CIT v. Bharat Iron and Steel Industries, 1993 Tax LR 188 (Gujarat), Overruled. Section 41(1) applies if the following conditions and circumstances are satisfied : In the assessment for the relevant year an allowance or deduction has been made in respect of any loss, expenditure or trading liability incurred by the assessee. This is the first step. Coming to the next step the assessee must have subsequently (1) obtained any amount in respect of such loss or expenditure or (ii) obtained any benefit in respect of such trading liability by way of remission or cessation thereof. In case either of these events happen, the deeming provision enacted in the closing part of sub-section ....