CHIEF COMMNR. OF INCOME TAX, COCHIN vs. M/S. KESARIA TEA CO. LTD

C.A. No.-001581-001581 - 2001Supreme Court19 March 20028 pages
For Petitioner: SUSHMA SURIFor Respondent: ASHA GOPALAN NAIR
AI SummaryDismissed

What did the Supreme Court hold?

The Tribunal and High Court held that the write-back of the provision for purchase tax did not amount to a cessation of liability under Section 41(1) as the dispute was still ongoing. The unilateral action of the assessee in writing back the amount was not conclusive.

What were the facts?

The assessee, engaged in the tea business, wrote back a provision for purchase tax liability made in earlier years. The Revenue added this amount to the assessee's income for the current year, treating it as income under Section 41(1). The Tribunal and High Court disagreed with the Revenue.

What were the issues?

Whether the write-back of a provision for a disputed trading liability constitutes cessation of liability under Section 41(1) of the Income-tax Act, allowing the Revenue to tax it as income.

Which sections of the Income-tax Act were involved?

Section 41(1)

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Cases cited in this judgment(2)Show list

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Cause title — parties, addresses and appearances
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 8 CASE NO.: Appeal (civil) 1581 of 2001 PETITIONER: THE CHIEF COMMISSIONER OF INCOME TAX, COCHIN Vs. RESPONDENT: M/S. KESARIA TEA CO. LTD. DATE OF JUDGMENT: 19/03/2002 BENCH: S. Rajendra Babu, K.G. Balakrishnan & P. Venkatarama Reddi.

JUDGMENT: P.VENKATARAMA REDDI, J.

The opinion recorded by the Kerala High Court in ITR No. 16 of 1997 has given rise to this appeal filed by the Chief Commissioner of Income-tax. The dispute relates to the assessment year 1985-86. At the instance of the Revenue the following question was referred under Section 256(1) of the Income-tax Act for the opinion of the High Court: "Whether on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that Rs.3,02,758/- cannot be brought to tax and in deleting the addition of Rs.3,02,758/- sustained by CIT (Appeals)?"

The High Court accepted the view of the Tribunal which partly allowed the appeal of the assessee and answered the question in favour of the assessee.

The facts in brief are: The respondent-assessee is engaged in the business of tea, spices etc. During the assessme

The order continues below.

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