JUDGMENT

P. Venkatarama Reddi, J.-In this appeal by Special Leave, the question of applicability of Section 41(1) of the Income Tax Act to the case on hand arises for consideration.

2. For the assessment year 1989-1990, a sum of Rs. 9,64,206/- which is the amount of excise duty refunded by the department was brought to tax by invoking Section 41(1) of the Income Tax Act (for short Act ). It appears that the excise duty was paid in the year 1986. On appeal, the first Appellate Authority as well as CEGAT held that the goods were not liable to duty. On 20.9.1988, the excise duty was refunded. On appeal filed to the High Court, it was dismissed, Thereafter, the Excise Department filed SLP in this Court. The fate of the SLP is not known The appellant contended before the first Appellate Authority that there was no remission or cessation of trading liability within the meaning of Section 41(1) so long as the issue was pending determination by the Supreme Court. That contention was accepted and the appeal was allowed. The appeal filed by the Income Tax Department against the said order was also dismissed. On a reference application filed by the Commissioner of Income Tax, the Tribunal re