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2012 (8) TMI 203 - AT - Income TaxRemission of deferred sales tax liability - whether chargeable to tax as business income or is exempt - Miss. application filled by the Revenue against order - Held that:- On comparison of the question noted by the Revenue and framed and answered by the Special Bench of the Tribunal, it is found that there is a mistake in the wordings of the question mentioned by the Revenue inasmuch as the highlighted portion of the question..."against the future value of ₹ 3,37,13,393/- " mentioned by the Revenue does not exist in the question framed by the Special Bench of the Tribunal. To invoke the provisions of section 41(1) 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 assessee whereas in the present case of assessee he has obtained the benefit of deduction of sales tax liability u/s. 43B as per CBDT Circular No. 496 dated 25.9.1987 which clearly stated that “...the statutory liability shall be treated to have been discharged for the purposes of Section 43 B”(emphasis supplied). Thus, the benefit of deduction was allowed for the purpose of section 43 B only and not under any other provisions of the Act. There is no dispute that the Assessing Officer has also applied the aforesaid Board Circular while giving the benefit of deduction u/s. 43 B, thus it is settled law that the circulars are binding on the department - as the first requirement of section 41(1) has not been fulfilled in the facts of the present case deferred sales tax liability will not be chargeable to tax as business income of the assessee - no mistake in the order of the Tribunal under the provisions of section 254(2). As the assessee itself has used the expression ‘remission’ of the loan liability. However, the position in law is well settled that making of an entry or absence of an entry cannot determine rights and liabilities of parties - no material to show that the finding given by the Tribunal are contrary to the settled position of law - in favour of assessee.
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