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2019 (9) TMI 293 - AT - Income TaxGain on prepayment of sales tax deferral loan - capital receipt or revenue receipt - income liable to be charged to tax as deemed profits and gains of firm u/s. 41(1) - HELD THAT:- We find that the issue whether the gain of pre-mature payment of deferred Sales Tax at net present value against total Sales Tax liability is capital in nature or revenue receipt/remission or cessation of liability u/s. 41(1) has been laid to rest by Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Sulzer India Ltd. [2014 (12) TMI 267 - BOMBAY HIGH COURT] as held 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. 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.
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