COMMISSIONER OF LNCOME TAX, MADHYA PRADESH, NAGPUR vs. HUKAMCHAND MOHANLAL

CIVIL APPEAL No. 2421/1968Supreme Court[1972] 1 S.C.R. 78617 September 1971Bench: 2 JudgesAuthor: K.S. HEGDE, A.N. GROVER4 pages
AI SummaryDismissed

What were the facts?

The assessee, who succeeded her deceased husband in business, was sought to be taxed under Section 41(1) of the Income-tax Act, 1961. The dispute concerned an amount of Rs. 24,341/- which her husband's firm had recovered as sales tax and which was subsequently remitted by the Assistant Commissioner of Sales Tax. The firm refunded this amount to the assessee, and the Income Tax Officer attempted to tax it in her hands under Section 41(1). The assessee contended that the income was that of her deceased husband, not hers. The Income Tax Officer and Appellate Assistant Commissioner rejected this. The Tribunal, however, agreed with the assessee, leading to a reference to the High Court.

What did the Supreme Court hold?

The Tribunal held that Section 41(1) of the Income-tax Act, 1961, does not apply to the present case. The reasoning was that the assessee sought to be taxed is not the assessee contemplated by Section 41(1). If the husband of the assessee had been alive and received the remitted amount during his lifetime, he would have been liable to tax under Section 41(1). However, since the husband had died, the Revenue could not take advantage of the provisions of Section 41(1). The Act does not contain any specific provision that makes a successor-in-business or a legal representative of an assessee, to whom an allowance has already been granted, liable to tax under Section 41(1) in respect of an amount remitted and received by the successor or legal representative. The Court concurred with the High Court's view. The operative direction was that the appeal fails and is dismissed.

What were the issues?

1. Whether the sum of Rs. 24,341/- was liable to tax in the hands of the assessee under Section 41(1) of the Income-tax Act, 1961, as profits and gains of business or profession. Assessee's contention: The assessee argued that Section 41(1) applies only to the assessee who obtained the allowance or deduction. Since the allowance for the sales tax was obtained by her deceased husband, and she, as his successor-in-business, received the remitted amount, she was not liable to tax under Section 41(1). The Act does not contain any provision making a successor-in-business liable under Section 41(1) for amounts remitted to them. Revenue's contention: The Revenue contended that the amount was taxable under Section 41(1) in the hands of the assessee.

Which sections of the Income-tax Act were involved?

Section 41(1),Section 2(7),Section 159

AI-generated summary — verify with the full judgment below

786 COMMISSIONER OF lNCOME TAX, MADHYA PRADESH, NAGPUR v. HUKAMCHAND MOHANLAL September 17, 1971 [K. S. HEGDE AND A. N. GROVER, JJ.J Jnco111e Tax Act, 1961, s. 41(1)- Assessee successor in business to her deceased husband--..A111ount received by assessee by way of remission of sales tax paid by h11sband-If liable to tax in the hands of the assessee under s. 41 (I).

The assessee who \Vas successor-in-business to her deceased husband A B was sought"to be taxed under s. 41(1) of the Income-tax Act, 1961, in respect of certain amount received by her by way of remission from the C sales tax recovered from her husband.

On the question whether the amount was assessable under s. 41(1) of the Act. HELD : Section 41 (I) does not apply, because, the assessee who is sought to be taxed is not the assessee contemplated by the section. ,.( the husband of the assessee had been alive and had received the amount which had been remitted during his life time he would certainly have been liable to pay tax under the provisions of s. 41 (I). But the husband having died D the Revenue could not take any advantage of its provisions. The Act does not contain any provision making a

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 41(1)

All 1,921 judgments and leading authorities on Section 41(1) →

Recent GST High Court judgments

Search GST case law →