Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2014 (12) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (12) TMI 267 - BOMBAY HIGH COURTTreatment of deferred sales tax liability on remission - Business income or not – Reliance placed upon CBDT Circular No. 496 dated 25th September, 1987 and Circular No. 674 dated 29th December, 1993 - Whether the Tribunal is justified in not upholding the finding of the Income Tax Authorities below that the deferred sales tax liability is chargeable to tax as business income of the assessee u/s. 41(1) on remission thereof and instead treating the same as exempt from tax as capital receipt being remission of loan liability – Held that:- The Assessee collected the total amount towards the Sales Tax of ₹ 7,52,01,378 and the Tribunal holds that it was collected from 1989-90 to 2001-02 - The Assessee treated this liability as unsecured loans in its books of account - the Revenue has not put up a case that there is no conversion provided under the BST or the table provided for determination of NPV is not applicable to the case of the Assessee - to invoke the provisions of section 41(1) of the Act, the first requirement is as to whether in the assessment of the assessee, an allowance or deduction has been made in respect of loss, expenditure or the trading liability incurred by the assesse – in CBDT Circular No. 496 dated 25.9.1987 it has been clearly stated that “the statutory liability shall be treated to have been discharged for the purposes of Section 43B” - the Tribunal rightly concluded that it is incorrect or erroneous to hold that the assessee obtained benefit of reduction of Sales Tax liability under section 43B of the I.T. Act as per Central Board of Direct Taxes' Circular No. 496 dated 25th September, 1987. Relying upon THE COMMISSIONER OF INCOME TAX AND THE DEPUTY COMMISSIONER OF INCOME TAX Versus M/s McDOWELL & CO LTD NOW KNOWN AS UNITED SPIRITS LTD [2014 (11) TMI 272 - KARNATAKA HIGH COURT] - the statutory levy being discharged by the Assessee, the amount thereunder was refunded to him - That will definitely be a case where he obtains an amount in respect of the expenditure within the meaning of section 41(1) - It will not be a case of “benefit by way of remission/cessation of trading liability” - the Incentive to establish a unit or factory in a industrially backward or hilly area is the core of the Sales Tax Deferral Scheme - Some time has to be given to the unit to establish itself before it starts giving corresponding benefit to the state - That opportunity is granted by deferring the remittance of the Sales Tax collected by the unit like the Assessee - the Government Resolution dated 4th May, 1983 evolves a package of incentives to disperse the industries from Bombay–Thane–Pune belt and to attract them to underdeveloped and developing areas of the State of Maharashtra - To carry this object further and also to achieve the purpose of early remittance of deferred Sales Tax collected by the units availing of the Schemes, the statutory option was incorporated in section 38 by substituting the 4th proviso to subsection 4 of section 38 of the Bombay Sales Tax Act, 1959 – a combined reading of the Schemes and this Circular reveals the legislative intent – thus, the order of the Tribunal is upheld – Decided against revenue.
|