COMMISSIONER OF INCOME TAX Vs. MANOHAR BANDHU

JUDGEMENT

(1.) THE assessee was buying goods from a commission agent in Bombay, called M/s Bapuji Narayan & Co. It appears that the assessee was in financial difficulty with the result that after S.Y. 2010 at the end of which, the closing credit balance to the account of Bapuji Narayan & Co. was Rs. 51,130, and there were no further purchases by the assessee from that company. Some payments were made towards discharging the outstanding liability by the assessee in the asst. yrs. 1957 58, 1965 66 and 1966 67, the total amount coming to Rs. 16,000 as against Rs. 51,130 outstanding at the end of S.Y. 2010. By release deed dt. 4th Oct., 1965, Bapuji Narayan & Co. accepted Rs. 16,000

(2.) THE ITO took the view that the remission for the purposes of S. 41(1) of the IT Act, 1961, took place in the asst. year 1966 67 and he added the amount of Rs. 42,266 with other income of the assessee. This order was upheld by the AAC.

(3.) ARISING out of this order of the Tribunal, the following two questions have been referred to this Court under S. 256(1) for opinion :