COMMISSIONER OF INCOME TAX vs REX COMMERCIAL CORPORATION PRIVATE LIMITED.

M. H. Kania, J.

This is an application under s. 256(1) of the IT Act, 1961. Only one question is sought to be directed to be referred to this court for its opinion in this application. As far as the said question pertains to s. 41(1) of the IT Act, the answer must be clearly against the department in view of the decision of this court in Commissioner of Income Tax, Bombay City-VI Vs. Sadabhakti Prakashan Printing Press (P.) Ltd., It was held in that case that in order that an amount may be income under s. 41(1) of the IT Act, 1961, there must be a remission or cessation of the liability in respect of the amount. The benefit contemplated by the section must be by way of "remission or cessation of liability" and no other benefit is contemplated. The transfer of an entry in the accounts is a unilateral act and does not bring about the cessation of the liability of the debtor. Hence the appropriation of an amount by reversal of the entry in P&L A/c for the year concerned cannot be brought to tax as a benefit contemplated by s. 41(1) of the said Act. As far as the question pertains to s. 28(iv) of the IT Act, apart from the fact that apparently that section has no application to the facts of the case, no such contention appears to have been advanced before the Tribunal.

In view of this, rule is discharged with no order as to costs.