PRAKASH NARAIN, A. M.: assessee is Private Limited Company. It was incorporated on 2nd Jan., 1979. Before its incorporation, Memorandum of Association was drawn up on 25th Dec., 1978. As per this memorandum it was decided that newly constituted company will take over business or businesses earlier carried on by firm called "New Cawnpore Flour Mills". One of main object of company as per its memorandum was: "1. To acquire, take over and take possession of business and under taking with all its movable and immovable assets (including actionable claims) & all other assets, rights, benefits titles, interests, approvals, registrations, permits, facilities, concessions, sanctions, privilages, licences, debts, belonging to or held by parties hereto in connection with business-carried on by them in partnership under name and style of New Cownpore Flour Mills as aforesaid and to undertake and discharge all liabilities in respect of any debt or obligation incurred or any contract entered into by, to, with or on behalf of aforesaid partnership and goodwill, if any, of such business." Article 2 of Articles of Association of assessee read as under: "2. business and assets specified in schedule hereto shall belong to and become property of company and having regard to obligations imposed and liabilities on company by these presents shall be taken at their net book value and shares to which parties hereto are to be entitled as aforesaid shall be deemed by fully paid up by means of net asset so brought it." schedule to Articles, among others, includes following: "Cash money Bank balance, Book debts, claims, receivables, securities, investments, deposits, stocks and other assets whether mentioned or not, at 82/2, cooperganj, Kanpur and Kejriwal Flour Mills, Gorakhpur or at any other office or offices of said New Cownpore Flour Mills, any where in India." firm whose business was taken over by assessee had paid sales tax. levy was contested in appeal first by firm itself and subsequently by present company. However, assessee succeeded to claim and received refund of Rs. 1,81,968. details of refunds are given on p. 1 of paper book submitted by assessee. Before us, it was conceded that sum of Rs. 79,750 related to period after business had been taken over by assessee. In other words, it was conceded before us that above amount was clearly taxable in assessment of assessee. We will, therefore, confine ourselves to balance of Rs. 1,02,108 only, although dispute before lower authorities was for entire amount of Rs. 1,81,866. ITO was of view that above amount represented assessee s income under s. 41 (1) of Act as it was in nature of revenue receipt. According to him amount was also taxable as business income under ss. 28 and 28 (iv) of Act. He, therefore, included amount in total of assessee. assessee appealed to CIT(A). It was submitted before him that amount could not be assessed as assessee s income under s. 41 (1) of Act in view of decision of Supreme Court in CIT vs. Hukumchand Mohanlal 1972 CTR (SC) 273: (1971) 82 ITR 624 (SC) and of Allahabad High Court in Mohanlal & Sons vs. CIT (1975) 101 ITR 177 (All). CIT(A) agreed with this submission. he was, however, of opinion that amount was still taxable under ss. 176 (3A) and 170(1)(b) of Act. He also observed that there could not be any dispute that receipt of amount was in nature of revenue receipt in view of two decisions of Supreme Court in Chowringhee Sales Bureau (P) Ltd. vs. CIT 1973 CTR (SC) 44: (1973) 87 ITR 542 (SC) and Sinclair Murray and Co. (P) Ltd. vs. CIT 1974 CTR (SC) 283: (1974) 97 CTR 615 (SC). above finding of CIT(A) has now been challenged before us by ld. counsel for assessee. We have heard parties. We will deal with various issues section in this order. We will first take up question whether provision of s. A1 (1) of Act are applicable to present case. answer to this issue is found in decisions of Supreme Court and Allahabad High Court referred to above. Supreme Court in CIT vs. Hukumchand Mohanlal (172) CTR (SC) 273: (1971) 82 ITR 624 (SC) held that Act did not contain any provision making successor in business of legal representative of assessee to whom allowance had already been granted, liable to tax under s. 41 (1) in respect of he amount remitted and received by successor or legal representative. This principle squarely applies to present case. present assessee, who was sought to be taxed was not assessee contemplated under above section. it was firm of New Cownpore Flour Mills, which had paid tax while refund has been received by assessee, which is successor to firm. similar view was taken by Allahabad High Court in Motilal & Sons vs. CIT (1975) 101 ITR 177 (All). decision of Supreme Court stated above was followed in this case. It was half that s. 10 (2A) of IT Act, 1922 corresponding to s. 41 (1) of Act of 1961 can be applied only if two conditions are satisfied, firstly, it must be shown that allowable for deduction has been made in assessment in respect of loss, expenditure or trading liability, and secondly, same assessee must have received amount allowed in respect of such loss, expenditure or trading liability. successor in business or legal representative of assessee to whom allowance has been granted, is not liable to tax under s. 41 (1) in respect of amount remitted and received. In this connection, we will also lie to refer to old decision of Bombay High Court, which was relied on by ld. counsel for assessee before us. decision is in case of CIT vs. Agrawal and Co., Bombay (1952) 21 ITR 293 (Bom). It was held in this case that in order to attract provisions of IT Act, and in order to levy income tax, it is not enough to enquire when particular income accrues. What is more important, and what is more pertinent is to enquire whose income it is, which is sought to be taxed. Receipt by itself is not sufficient to attract tax, it is only receipt as "income" which can attract tax. if income is assigned by person to another, in respect of that income it is not assignee, who is liable to pay tax, but assignor. assignee received income not by reason of fact that it is his income, but he receives it by virtue of assignment. His title to income arises, not by reason of fact that he has earned it, but by reason of fact that principle applies to present case also. assessee is successor of firm of New Cownpore Flour Mills. It has received refund of sales tax by virtue of fact that it has taken over business of former and not because it is its own income. Sec. 28 cannot, therefore, be attracted to such income. similar view was taken by Delhi High Court in recent case of CIT vs. Mineral and Metals Trading Corpn. of India Ltd. (1985) 47 CTR (Del) 271. In this case, decision of Supreme Court reported in Hukumchand Mohanlal (172) CTR (SC) 273: (1971) 82 ITR 62 (SC) (supra) was relied. Before we proceed further we may also refer to two decisions cited by ld. Departmental Representative. One is of Madhya Pradesh High Court in Addl. C I T vs. Chandrakant D. Patel (1983) 139 ITR 233 (MP). In this case, assessee contended that amount of sales tax was recovered and paid by assessee in his individual capacity and, therefore, it did not constitute trading receipt in hands of assessee, which was partnership firm. It was held that above plea had been give up by assessee before Tribunal. Court, however, observed as under: "Moreover, as found by ITO, which has not been challenged by assessee. as per deed of partnership, liabilities and assets as well as litigation of proprietary concern were taken over by assessee firm. In circumstances, it is not open to assessee to raise aforesaid contention and on merits also it has no substance." These observations no doubt have thrown some doubt on view expressed earlier. similar view was expressed by Allahabad High Court in case of T. N. Shah (P) Ltd. vs. Addl. CIT (1979) 9 CTR (All) 207: (1978) 120 TIR 354 (All). observation of Court appear at p. 357 of report as under: "If in given case, income of business is computed by taking into account certain debt, it does not appear reasonable that in absence of any statutory prohibition, allowance on account of debt having become bad should be denied only because assessee s identity is changed, though identity of business continues." However, keeping in view decision of Supreme Court in (1971) 82 ITR 624 (supra) and decision of Allahabad High Court reported in (1975) 101 ITR 177 (All), which specifically dealt with question of taxability under s. 41 (1) of Act, we hold that assessee is not liable to tax on sum of Rs. 1,02,108 under s. 41 (1) of Act. We will now deal with whether any liability attaches to above amount under s. 176 (3A) of Act. In view of this s. 176 (3A) where any business is discontinued in any year, any sum received after discontinuance shall be deemed to be income of recipient and charged to tax accordingly in year of receipt if such sum would have been included in total income of person who carried on business had such sum been received before such discontinuance. above section applies only where business has been discontinued. We have, therefore, to see whether present case is of circumstances of business. We have already stated above that earlier business was carried on by firm of New Cownpore Flour Mills. It has been taken over as going concern by present company. In our view this does not amount to discontinuance of business but this is case of succession of one assessee by another assessee. This principle is clear from decision of Supreme Court in CIT vs. A. N. Piggies & Co. (1953) 24 ITR 405 (SC). In this case also business formerly run by firm had been taken over by limited company. Taking over of business of firm by company was throughout considered as case of succession and not of discontinuance of business. clear case on point is of Privy Council in CIT vs. P. E. Polson (1945) 13 ITR 384 (PC). It was held in this case that word distinguished in s. 25 (3) of IT Act, 1922 means only complete cessation of business and does not include case of discontinuance of business by person formerly carrying it on as result of transfer or assignment of that business t o another person, who thereafter carries it on. Unless otherwise stated, same word has to be given similar meaning in Act. according to this principle, therefore, discontinuance means complete cessation of business and not transfer of business by one person to another. Madras High Court in O. Rm. M. S. P. Meyyappa Chettiar vs. CIT (1943) 11 ITR 247 (Mad) gave similar finding. Court held that word "discontinuance" in s. 25 (3) gave similar finding. Court held that word "discontinuance" in s. 25 (3) of IT Act, 1922 means "cessation" and does not cover cases of succession. direct case on point is of Calcutta High Court in Krishna Hydraulic Press Ltd. vs. CIT (1943) 11 ITR 504 (Cal). Here, assessee-company had taken over business of firm. It was held that assessee was successor to firm. In view of above authorities, there is no escape from conclusion that present is case of succession by assessee to business of t h e firm. It is not case of discontinuance of business. As such provisions of s. 176 (3A) cannot be applied in order to bring to tax refund of sales tax in assessment of assessee. We will now deal with s. 170 (1)(b) of Act which has also been relied on by CIT(A) for assessing above amount. In our opinion, application of this section is misconceived, It is machinery section. It lays down procedure where there is succession of business of one person by another person. section says that predecessor shall be assessed in respect of income of previous year in which succession took place upto date of succession and successor shall be assessed in respect of income previous year after date of succession. Unless amount is held to be income of previous year, question of its assessment either in hands of predecessor or in hands of successor will not arise. We have already stated above that amount is not in nature of income of previous year in hands of assessee. It cannot, therefore, be assessed under above section. CIT(A) has also referred to s. 28 (iv). According to this section, value of any benefit or perquisite, whether convertible into money or not arising from business or exercise of profession is assessable under head "Profits and gains of business or "profession". Gujarat High Court in CIT vs. Alchemic (P) Ltd. (1983) 20 CTR (Guj) 83: (1983) 130 ITR 168 (Guj) has held that it is only if benefit or perquisite is not in cash or money that s. 26 (iv) would apply and question of including value of such benefit or perquisite as income from business would ever arise. This section, according to principle laid down by Court has no application to cash receipt. Following this principle, we hold that present amount received by way of refund of sales tax cannot be brought to tax under above section also. Our dinging, therefore, is that amount of Rs. 1,02,108 is not in nature of income in hands of assessee and is not taxable as its income. assessee will therefore, succeed only in part. next contention relates to disallowance of claim of Rs. 1,33,654. This is amount of sales tax due from assessee for June, 1983. However, it was payable after 30th June, 1983. assessee s accounting year is from 1st Feb., 1982 to 30th June, 1983 relevant for asst. yr. 1984-85. Admittedly, this amount was not paid upto 30th June, 1983 i.e. in year under appeal. ITO was, therefore, of view that it could not be allowed as deduction in terms of s. 43B of Act inserted by Finance Act, 1983 w.e.f. 1st April, 1984. This decision states that notwithstanding anything contained in any other provision of IT Act, deduction otherwise allowable under Act in respect of any sum payable by assessee by way of tax or duty under any law for time being in force shall be allowed (irrespective of previous year in which liability to pay such sum was incurred by assessee according to method of accounting regularly employed by him) only in computing income of business of previous year in which such sum is actually paid by assessee. In other words, above amount according to ITO is liable to be allowed only in assessment year in which it is actually paid. Since it was not paid in asst. yr. 1984-85, when s. 43B is applicable, he was of opinion that assessee was not entitled to its deduction. assessee contended that above section did not apply to its case as it related only to sum payable by assessee by way of tax. It was submitted before assessee that since amount was not payable to sales tax Department upto 30th June, 1983. i.e. upto end of assessment year under appeal, provisions of s. 43B had no application and its allowability did not depend upon its actual payment. This contention was rejected by ITO following decision of Supreme Court in Kedarnath Jute Mfg. Co. Ltd. vs. CIT (1971) 82 ITR 363 (SC). His view was upheld by CIT(A). latter also observed that even otherwise sales tax was revenue receipt in light of decisions already cited in our this order. assessee is now in appal before us. In our opinion, interference is called for in findings of lower authorities. Supreme Court in Kedarnath Jute Mfg. Co. Ltd. (supra) held that moment dealer made either purchases or sales which were subject to sales tax, obligation to pay tax arose. Although that liable could not be enforced till quantification was effected by assessment proceedings, liability for payment of tax was independent of assessment. In view of this principle, liability for payment of sales tax of month of June, 1983 amounting to Rs. 1,33,654 arose before end of June, 1983 i.e. during assessment year under appeal itself. provisions of s. 43B are, therefore, applicable to this amount and it was rightly disallowed as it had actually not been paid. It was alternatively submitted before CIT(A) that assessee had also discharged one of its sales tax liabilities relating to asst. yr. 1983-84 on 23rd Feb., 1982. This amounted to Rs. 1,96,994. It was contended that this amount then also required to be allowed in light of s. 43B. contention was rejected by CIT(A) observing that on such claim was made before ITO and this inverted logic did not retract position discussed in his order earlier. above findings of CIT(A) has been challenged before us. In our opinion, there is merit in contention of assessee. We have already held above that s. 43B is applicable to year under appeal and, therefore if any, payment of any tax is made in this year, assessee is entitled to its deduction. However, that deduction is subject to Explanation to be above section. It lays down that where deduction has already been allowed by earlier year in which liability to pay such sum was incurred by assessee, assessee shall not be entitled to any deduction in respect of such sum in computing income of previous year in which it is actually paid. We have, therefore, to see whether above amount of Rs. 1,96,994 was or was not allowed to assessee in any of earlier years. ld. counsel for assessee was unable to show us this facts. In our opinion, in interest of justice only course open to us is to direct ITO to go into matter. He has first to verify whether there was any such liability of Rs. 1,96,994 towards sales tax due by assessee. He has then to find out whether such liability had been allowed in any of earlier years. If it was not allowed, then he has to allow it as any of earlier years. If it was not allowed, then he has to allow it as deduction in assessment years under appeal under s. 43B of Act. other contentions raised in appeal were not pressed before us and are, therefore, rejected. In result, appeal is partly allowed. *** NEW COWNPORE FLOUR MILLS (P) LTD. v. INCOME TAX OFFICER