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2013 (4) TMI 286 - HC - Income TaxDisallowance u/s 43B on account of outstanding luxury tax liability - whether ITAT corrected in directing the A.O. to work out the disallowance on the basis of actual realisation of the luxury tax and not on the basis of unrealised luxury tax although the assessee was maintaining its accounts under mercantile system - Held that:- The Act imposes tax on income. The word 'income' has been defined under Section 2 (24) of the Act. Scope of total income has been provided under Section 5 stating total income of any previous year of a person, who is resident includes all income from whatever source derived which (a) is received or is deemed to be received in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year or (c) accrues or arises to him outside India during such year. Thus in order to form income of a person, the person must receive or deemed to receive any sum. The amount of luxury tax which was not received cannot form part of the income of any person. Section 43B of the Act is concerned with deduction claimed by the assessee. It does not caste duty on the assessee to realize the various amounts mentioned in it. In case, where a person has not realized luxury tax from the customers then under the law he being liable to pay it and it will be realize from him under the relevant law irrespective of the fact that he has collected or not. But it does not give the Assessing Officer any jurisdiction to add it in the gross income of the assessee. CIT (A) as well as the Tribunal have concurrently found that the respondent has not realized the amount of luxury tax, which was added in his gross income. The case laws relied upon by the counsel for the Revenue are not applicable in this case as in those cases the assessee had actually collected the amount of sales tax and has not paid to the Department - the question referred is answered in the affirmative i.e. against the Department and in favour of the assessee.
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