Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2014 (11) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (11) TMI 272 - KARNATAKA HIGH COURTTaxability of deferred tax u/s 41(1) or u/s 28(4) – Whether the Tribunal was correct in holding that the assessee is not liable to pay tax in respect of the amount which was collected as BST and CST on behalf of Maharashtra State and allowed as a deduction during the assessment year 2003-04 which was waived during the current AY 2004-05 and had been brought to tax u/s 41 – Held that:- If the assessee obtains, whether in cash or in any other manner in respect of such loss or expenditure or some benefit in respect of trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income tax as the income of the previous year - the assessee should obtain benefit, before it is deemed to be profits and gains of business or profession. As per the scheme he was allowed to retain the sales tax as determined by the competent authority and pay the same 15 years thereafter - 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 loan had to be repaid after 15 years - Again it is an incentive - However, 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 - Sectio n41 (1) of the Act is not attracted - the Tribunal was justified in holding that there is no liability to pay tax – thus, the order of the Tribunal is upheld – Decided against revenue.
|