In Brief
The Supreme Court dismissed the Income Tax Department's appeals challenging the High Court's decision that an amount saved through deferral sales tax remission is not taxable income. The assessee had paid deferred sales tax collected at Net Present Value (NPV) under a Maharashtra government scheme and saved Rs. 4.14 crore. The Court held that Section 41(1) of the Income Tax Act requires both a prior deduction and subsequent remission or cessation of liability. Here, paying the debt prematurely at its correct present value does not constitute remission or cessation, therefore the saved amount is not income.
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