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2016 (10) TMI 1269 - AT - Income TaxAddition u/s.41(1) r.w.s 28(iv) - assessee had availed deferred scheme for sales tax liability called interest free sales tax deferral scheme introduced by Tamil Nadu Government in May, 1990 - CIT- A deleted addition - Option to persons taking the benefit of deferral scheme, to pay the deferred tax in one lumpsum at the discounted rate of 8% as availed by assessee - HELD THAT:- As decided in M/S MCDOWELL & CO LTD NOW KNOWN AS UNITED SPIRITS LTD [2014 (11) TMI 272 - KARNATAKA HIGH COURT] the tax collected was deemed to have been paid and, therefore, the tax so collected cannot be construed as income in the hands of the assessee. The tax so retained by the assessee is in the nature of a loan given by the Government as an incentive for setting up the industrial unit in a rural area. The said loan had to be repaid after 15 years. Again, it is an incentive. By a subsequent scheme, a provision was made for premature payment. When the assessee had the benefit of making the payment after 15 years, if he is making a premature payment, the said amount equal to the net present value of the deferred tax was determined and on such payment the entire liability to pay tax/loan stood discharged. Again, it is not a benefit conferred on an assessee. Therefore, section 41(1) of the Act is not attracted to the facts of this case. Hence, the Tribunal was justified in holding that there is no liability to pay tax. - Decided against revenue.
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