AIR 1991 SUPREME COURT 70 ::1990 TAX. L. R. 1003 ::1991 All TaxJ 227 ::1991 ( ) Com NR 59 ::(1990) 3 ComLJ 200 ::1990 (2) UJ (SC) 633 ::(1990) 88 CurTaxRep 61 ::(1991) 70 ComCas 184 ::1990 (186) ITR 278 ::1990 ( ) SCC(Supp) 675 ::1991 (1) UPTC 139 ::(1990) 53 Taxman 92 ::(1991) 1 CurLJ(CCR) 269 ::(1990) 4 JT 353 (SC) ::1990 (4) JT 353

Supreme Court Of India

(From : Punjab and Haryana)*

Hon'ble Judge(s): K. N. Singh, T. K. Thommen, Kuldip Singh , JJJ

Business income - Trading liability allowed to assessee in previous year - Tax on benefit obtained by assessee in respect of such trading liability in subsequent year - Permissible only if identify of assessee in previous year and subsequent year is same - Amalgamation (Transferor) Company loses its identily - S. 41(1) cannot be applied. Income-Tax Act (43 of 1961) , S.41(1)— Companies Act (1 of 1956) , S.394— Section 41(1) has been enacted for charging tax on profits made by an assessee, but it applies to the assessee to whom the trading liability may have been allowed in the previous year. If the assessee to whom the trading liability may have been allowed as a business expenditure in the previous year ceases to be in existence or if the assessee is changed on account of the death of the ealier assessee the income recieved in the year subsequent to the previous year or the accouting year cannot be treated as income recieved by the assessee. In order to attract the provisions of S. 41(1) for enforcing the tax liablity, the identity of rhe assessee in the previous year and the subequent year must be the same. If there is any change would in the identity of the assessee there would be no tax liability under the provisionms of S. 41. In amagamation two more companies are fused into one by merger or by taking over by another. The true effect and character of th....