TMI Blog2000 (8) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... below in narrow compass are that the assessee has claimed deduction on account of deferment of payment of Sales-tax to the tune of Rs. 3,42,749 which was initially disallowed by the Assessing Officer while issuing intimation under section 143(1)(a) of the Act but the same was later on allowed through its order passed under section 154 of the Act on the application of the assessee. Subsequently, regular assessment under section 143 was framed and the Assessing Officer allowed the deduction on account of deferment of payment of Sales-tax to the assessee vide assessment order dated 15-1-1995. 5. On scrutiny, the CIT noticed that according to the provisions of section 22(3B) of the M.P. General Sales-tax Act, (hereinafter refer-red to as 'MPGST Act') when the Sales-tax liability is converted into loan liability in accordance with the relevant provisions of MPGST Act, such Sales-tax shall be deemed to have been paid in accordance with the Sales-tax Act of the State. The conversion of the Sales-tax liability into loan liability by a specified agency i.e. M.P. Audhyogik Vikas Nigam is a prime condition to treat the Sales-tax deferment as deemed payment under section 43B of the Act. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment under section 143(3) of the Act. It was further argued by him that once the Assessing Officer takes a particular view after due application of mind on a particular issue, the view taken by the Assessing Officer cannot be revised by the CIT under section 263 of the Act though he may not agree with the Assessing Officer's view. In support of his contention, Mr. Deshpande has relied upon the following judgment: Gee Vee Enterprises v.AddL CIT [1975] 99 ITR 375 (Delhi), Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 (SC), CIT v. Ratlam Coal Ash Co. [1988] 171 ITR 141 (MP), CIT v. Gabrial India Ltd [1993] 203 ITR 108 (Bom.) CIT v. Shri Govindram Seksariya Charity Trust [1987] 166 ITR 5803 (MP) Thalibai F. Jain v. ITO [1975] 101 ITR 1 (Kar.), Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC) and Kanhaiyalal v. CIT [1982] 136 ITR 243 4 (Raj.). 7. On merit, Mr. Deshpande has vehemently argued that the issue involved relating to the claim of deduction of Sales-tax paid under the deferment payment scheme is covered by the judgment of the jurisdictional High Court in the case of CIT v. K.N. Oil Industries Ltd [1997] 226 ITR 547 (MP.). He further urged that necessary amendments wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State Government through the Government orders. This condition is not applicable to those deferral schemes which were brought into effect by virtue of an amendment in the Sales-tax Act. Mr. Deshpande further urged that as per the provisions of section 22(3B) of the MPGST Act, the assessee is entitled to claim deduction of Sales-tax liability on account of deferment of Sales-tax scheme as soon as the specified agency issued an eligibility certificate to the assessee. 8. The learned Departmental Representative, on the other hand, has submitted that if the Assessing Officer does not apply his mind in view of the relevant provisions of law and takes a decision which is contrary to the existing provisions of law and his order is erroneous and prejudicial to the interests of the revenue, the CIT has jurisdiction to revise the assessment order passed. The application of mind by the Assessing Officer means the Assessing Officer should adjudicate the issue in the light of the existing provisions of law and prevailing judicial pronouncements of the higher authorities. In the entire assessment order there is no discussion about impugned issue. The Assessing Officer has simply raised a qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain, a further controversy was raised with regard to the previous year in which the statutory liability shall be treated to have been discharged for the purpose of section 43B of the Act. For removing this confusion, further Circular No. 674 dated 29-12-1993 was issued by the CBDT clarifying that the deferral scheme can also be launched by the State Government through Government orders instead of making the amendment in the Sales-tax Act. It was also clarified through this circular that the Board has decided that the amount of Sales-tax liability converted into the loans may be allowed as deduction in the assessment year for the previous year in which such conversion has been permitted under the Government orders. Since it has been clarified by the Board that the deduction of deferment of Sales-tax liability can only be allowed on the conversion of the Sales-tax liability into a loan liability, it cannot be allowed on issuance of the eligibility certificate by a specified agency. It was further contended by Mr. Brijesh Gupta that the Government had laid down a procedure by introducing a scheme containing rules and regulations for giving effect to the new amendment brought by Act, N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n response to the query, the assessee has simply filed a letter from the Government and the copy of the Sales-tax account. From a careful perusal of the assessment order in the light of the reply to the queries furnished by the assessee, we are of the view that the issue of entitlement of deduction on account of deferment of Sales-tax was not examined by the Assessing Officer in the light of circulars of the Board and the scheme pertaining to the rules for granting conversion certificate and the Assessing Officer has allowed the claim of the assessee without making any discussion on this issue in the assessment order. Though the circulars issued by the CBDT and the scheme launched by the State Government in this regard were in force and the Assessing Officer is governed by the circulars issued by the CBDT, the Assessing Officer has not adjudicated the issue in the light of above provisions. However, the CIT has examined the assessment order in the light of the relevant provisions of the MPGST Act, the scheme launched by the State Government in this regard, the Circular No. 496 dated 25-9-1987 and the Circular No. 674 dated 29-12-1993 before holding that the assessee was not entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority for conversion into a provisional loan liability of the deferred tax payable by it according to the returns of every year or part thereof covered by the period of the eligibility. Such applications accompanied with other documents i.e., copies of returns under the State and Central Sales-tax Acts and the certified copy of the eligibility certificate issued by the competent authority, shall be made within 60 days of the date of expiry of the year or part thereof covered by the period of eligibility. 14. On receipt of the application in Form-A and the certification in Form-B from the appropriate Sales-tax Officer, the competent authority shall verify the contents and if on verification the competent authority is satisfied, it shall pass an order in Form-D converting the amount of deferred tax into the provisional loan liability. A copy of the order sheet is sent by the competent authority to the eligible unit and the appropriate Sales-tax Officer. Thereafter, again the eligible unit shall make further application in Form-A to the competent authority to convert the total tax assessed into the final loan liability within 60 days from the final Sales-tax assessment order and su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es-tax under M.P. Deferment of Payment of Tax Rules, 1983 or the M.P. Deferment of Payment of Tax Rules, 1986, as the case may be, will also be eligible to apply for the conversion of the deferred tax payable by them into a provisional loan liability according to the returns for every year or part thereof, covered by the period of eligibility, within 60 days of publication of this scheme. (1)(b) Every such application shall be accompanied by- (i) Copies of the returns under the State Act and/or the Central Act, as the case may be, relating to the year or part thereof, the tax relating to which is sought to be converted into a loan liability. (ii) A certified copy of the eligibility certificate issued by the Competent Authority. (1)(c) On receipt of the application in Form 'A' and the certificate in Form 'B' from the appropriate Sales-tax Officer, the Competent Authority shall verify the contents of the application and satisfy itself that the particulars furnished therein are correct, and complete and that the amount of deferred tax sought to be converted into a provisional loan liability is the same as indicated by the appropriate Sales-tax Officer in his-certificate in For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the deferred tax into: (i) a provisional loan liability, if the assessment for the year or part thereof has not been made by the assessing authority, or (ii) a final loan liability, if the assessment for the year or part thereof has been made by the assessing authority. (3)(b) the application in From 'A' shall be accompanied by: (i) copies of the returns under the State Act and/or Central Act, a copy of the order of assessment, (ii) a certified copy of the eligibility certificate issued by the competent authority. (3)(c) On receipt of the application in Form 'A' from the eligible unit and the certificate in Form 'B' from the appropriate Sales Tax Officer, the Competent Authority shall verify the contents of the application and pass an order converting the deferred tax into a provisional or final loan liability in the manner specified in clause (e) of sub-rule (1) of clause (c) of sub-rule (2) as the case may be. (4)(a) Where any deferred tax relating to any year or part thereof covered by the period of eligibility and converted into a final loan liability is modified by an order in reassessment, appeal, revision or by order of any court, the eligible unit shall m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into the loan liability and the necessary orders were issued by the competent authority in Form-D as per rule 3(2)(c) of scheme for conversion of deferred tax into loan. Until and unless the deferred sales-tax is converted into the final loan liability, the assessee is not entitled to claim deduction for the same in view of section 22(3B) of the MPGST Act and the aforesaid circulars issued by the CBDT. An eligibility certificate issued by the competent authority to the eligible unit for making the application in Form-A to the competent authority for the conversion into a provisional loan liability of the def erred tax as per rule (3)(1)(a) would not entitle the eligible unit to claim the deduction of deferment of Sales-tax in view of the provisions of section 22(3B) and the aforesaid circular of the CBDT because before issuing a final conversion certificate the authorities concerned have to make detailed verification. We are, therefore, of the view that the deduction of deferment of Sales-tax can only be claimed by the assessee after the order was passed by the competent authority in Form-D converting the amount of Sales-tax assessed by the Assessing Officer representing the deferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject in its order. An oblique reference in a questionnaire issued to the assessee with regard to the impugned issue is not sufficient to say that the impugned issue has been examined by the Assessing Officer after application of mind in accordance with the existing provisions of law. 17. Keeping in view the totality to the facts and circumstances of the case in the light of the existing legal provisions, we are of the considered opinion that the CIT was justified in holding that the order of assessment on this count was erroneous and prejudicial to the interests of the revenue. We, therefore, uphold the order of the CIT. 18. ITA No. 1228/Ind/1996: In this appeal the assessee has raised various grounds but all the grounds relate to the setting aside of the assessment order by the CIT by invoking the provisions of section 263 of the Act by holding that the assessment order is erroneous and prejudicial to the interests of the revenue because the Assessing Officer had wrongly allowed the claim of deduction of deferment of Sales-tax to the assessee. 19. An identical issue has already been adjudicated by us in the foregoing appeal and for the reasons discussed therein, we hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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