TMI Blog1997 (2) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee submitted that this issue had earlier been agitated in the assessee's own case in relation to the assessment years 1978-79 to 1983-84 and the Tribunal by its order dated 30-11-1988 in the ITA No. 920/PN/83, etc., had concluded this issue in favour of the assessee. No reference has been sought by the department against this order of the Tribunal. This order has further been followed by this very Bench in its order dated 28-9-1993 in ITA No. 870/PN/88, etc. The payment for the current year has been made pursuant to the same agreement under which the payments for technical know-how were made in the earlier years. Even though the department had made a reference application in relation to the assessment years 1984-85 and 1986-87, no question relating to the treatment of the technical know-how fees as capital/revenue capital was suggested. As such, according to the learned counsel, the issue stands concluded against the department. We find that the plea of the learned counsel is fully substantiated by the above orders. This ground raised by the department is, therefore, liable to be rejected. Ground No. 2: 3. The issue involved in this ground has been dealt with by the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of raw material subsequent to their purchase and that the purchases tax which has already been paid at the time of purchase of raw materials is the tax out of which these set off claims are made by the assessee and were allowed by the Sales-tax Department. The IAC(Appeals) has also further erred in completely ignoring the fact that the balance outstanding on the sales-tax set off account do not represent any outstanding sales-tax liability to be paid in future. It only represents a credit balance on the account that sales-tax department on account of claims made by the assessee which are to be finally determined by them. This set off claims represent a source of receipt for the assessee-company out of purchase tax already paid and further the assessee- company has opted to offer the said receipt on the basis of the date when finally determined and accepted by the sales-tax department. This apart it was also proved that out of a sum of Rs. 68,18,409 on account of sales-tax set off two sums amounting to Rs. 14,52,518 and have already been added back to the income of the appellant-company for the assessment years 1983-84 and 1984-85. Thus at the most sum of Rs. 29,51,283 pertaining t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined by the authorised representative this is a sort of source of income to the appellant-company, but it has been shown on liability side till final decision is taken by the sales-tax dept. by allowing set off against purchases tax already paid by the appellant-company. I, therefore, do not agree to the view that the sales-tax set off can be disallowed under section 43B of the Act. 11. Insofar as the excise duty balances are concerned, I find that these provisions related from assessment years 1980-81 to 1984-85. Even if provisions have to be disallowed on the basis of earlier liability before insertion of section 43B, they should have been added back in the respective assessment years. I was told that at least up to assessment year 1983-84 such provisions have been added back and that even for assessment year 1984-85 remaining provision of Rs. 2,82,933 has also been added. Thus, for all these reasons except ESI collection, MSL Provident fund, F.P.F. collection and octroi duty, three items of disallowance of Rs. 68,18,490, Rs. 49,409 and Rs. 11,35,215 should be excluded from the total disallowance." 4. It was submitted by the learned departmental representative that the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6] 30 ITR 338. It was submitted by the learned counsel for the assessee that asphalting and concreting of roads has not led to creation of any new asset. The asphalting and concreting amounts only to repairs or improvement of roads. It is not necessary that in order to classify an expenditure as of revenue nature, such expenditure should only be on current repairs. According to the learned counsel, direct support to his contention is available from the decision of the Bombay High Court in the case of CIT v. Chemaux Ltd [1994] 74 Taxman 201. 7. We have studied the decision of the jurisdictional High Court and find that it covers the issue under consideration on all fours. It has been held therein that expenditure on repairs of approach roads and resurfacing of kachha road inside the factory premises constitute expenditure of revenue nature and is therefore allowable as such. In view of this decision of the jurisdictional High Court, further discussion of the issue does not appear to us to be necessary. We therefore reject this ground of appeal. 8. In the result, the appeal fails and is dismissed. Per P. Pradhan, Accountant Member-I have gone through the order passed by my lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 28-9-1993, for the assessment years 1984-85 to 1986-87, it may be mentioned that the order dated 28-9-1993, simply followed the order dated 30-11-1988, though they were for the subsequent to the insertion of section 43B. The orders dated 30-11-1988 and 28-9-1993, are before and after the insertion of section 43B, but, the result is the same. The later decision has been rendered merely following the earlier one on the footing that as if section 43B has not brought any change to the scheme of taxation. 5. By now it is well-settled that the sales tax collected is a revenue receipt as per decisions of: 1. Chowringhee Sales Bureau (P.) Ltd v. CIT [1973] 87 ITR 542 (SC) 2. Sinclair Murray Co. (P.) Ltd v. CIT [1974] 97 ITR 615 (SC) 3. Central Wines v. Special CTO 1987 SC 611. Therefore, the sales-tax collected but the portion not paid is to be treated as trading receipt and should be taxed, as section 43B prohibits any other deductions except those which have been actually paid. In the instant case, the assessee is collecting sales-tax and is not paying to the Government as required but keeping in a separate account and is not also showing the same as its income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 43B has an overriding effect on the provisions relating to the computation of income under the head 'Profits and gains of business or profession'. The requirement of section 43B is a mandatory. So in view of these facts, once it is held that sales-tax receipts are trading receipts, and they had not been paid during the accounting year, then there is no escape from taxation only on the ground that they were not due. Their Lordships have further observed in the abovementioned case that where intention of the Legislature in enacting the provision in question was to put an embargo on the deductions, to interpret the same in any other way amounts to defeating that purpose. In this connection, the intention of the Legislature in enacting the provisions of section 43B would be apparent from clause 18 of the Finance Bill, 1983. This section was inserted by Finance Act, 1984 w.e.f. 1-4-1984. The Hon'ble Finance Minister, while introducing the Bill, explained the objects and background of the bill as under. "Several cases have come to notice where taxpayers do not discharge their statutory liability such as in respect of excise duty, employer's contribution to provident fund, Employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Distributors (Baroda) P. Ltd [1972] 83 ITR 377 at page 383, their Lordships have held that "we cannot say that the Legislature did not know its own mind when it used its own expression in section 23A. We must give some reasonable meaning to that expression. No part of provision of a statute can just be ignored by saying that the Legislature enacted the same not knowing what was saying. We must assume that the Legislature deliberately used that expression and intended to convey same meaning thereby". 9. I may also refer the findings of their Lordships of Supreme Court in the case of Smt. Tarulata Shyam v. CIT [1977] 108 ITR 357. Their Lordships observed at page 357, and onwards, is worth noting: 'There is no scope for importing into the statute words which are not there. Such an importation would be, not to construe, but to amend the statute. Even if there be a casus omission, the effect can be remedied only by legislation and not by judicial interpretation". They further observed: "To us there appears no justification to depart from the normal rule of construction, according to which the intention of the Legislature is primarily to be gathered from the words used in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the sales-tax assessment. In this regard, the learned Judicial Member followed the various decisions of the Tribunal which have been discussed by him in his order. 2. The learned Accountant Member, however, was of the view that the sales-tax collected was the revenue receipt, in view of the decisions of the Supreme Court in the cases of Chowringhee Sales Bureau (P.) Ltd, Sinclair Murray Co. (P.) Ltd and Central Wines. He also was of the view that under the provisions of section 43B the expenditure was allowed to be deducted only on actual payment. He also dealt with the intention of the Legislature in enacting the provisions of section 43B of the Income-tax Act. He also did not agree with the views expressed by the other Benches of the Tribunal and held that the sales-tax collected and not paid was liable to be disallowed under section 43B of the Income-tax Act. On these facts, the point of difference of opinion was formulated in the following manner and it came up before me as Third Member under section 255(4) of the Income-tax Act: "(1) Whether, on the facts and in the circumstances of the case, section 43B is attracted in the present case? (2) Whether the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on allows the liability as a deduction in the year in which it is actually paid. In this connection, the stand of the assessee seems to be that the entire Rs. 100 is to be allowed as deduction because Rs. 80 is actually paid and Rs. 20 is the liability on account of set off which is adjusted by the sales-tax department. In this connection, the assessee treats this amount of Rs. 20 as payment by adjustment. Thus, the same amount of Rs. 20 is treated as a notional payment. The learned senior departmental representative contended that the department's thinking is that as regards the same amount of sales-tax which is amounting to Rs. 20 in the hands of the same assessee, contradictory presumptions made by the assessee cannot be allowed. When it comes to taxability, it is treated as notional income and when it comes to an allowance of liability tinder section 43B, the same amount is treated as notional payment. As these are contradictory presumptions made by the assessee as regards the same amount, they cannot be allowed. Therefore, the entire amount of Rs. 100 cannot be allowed as a deduction under section 43B of the Act. In the opinion of the learned senior departmental representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be retained for the assessment year 1985-86, this would amount to double addition as the same has been added as income for the assessment year 1988-89. 8. Shri Dastur pointed out that this is the settled position. He further argued that the settled position should not be unsettled unless there is fresh material before the Tribunal. in this regard, he has drawn my attention to the decisions of the Bombay High Court in the cases of H.A. Shah Co. v. CIT [1956] 30 ITR 618 and CIT v. Shree Nirmal Commercial Ltd. [1995] 213 ITR 361 (Bom.) (FB). He argued that on this point alone, the view taken by the learned Judicial Member should be upheld. 9. On merit, the learned counsel pointed out that the amount has wrongly been taken at Rs. 68,18,409. As a matter of fact for the assessment year the sum for consideration is only Rs. 29,51,283. The balance amount has already been considered for set off/disallowance for assessment years 1983-84 and 1984-85. 10. The learned counsel has also dealt at length with the order of the learned Accountant Member. He pointed out in particular that the decision of the Supreme Court in the case of Chowringhee Sales Bureau (P.) Ltd. cannot be applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not claimed deduction under section 43B in the year under consideration and, therefore, the said provisions cannot be applied to the case of the assessee. 12. The learned counsel further continued and said that the issue in this appeal is not only covered by the decision of the Tribunal in the assessee's own case, but in the case of Hindustan Commercial Corpn. v. Second ITO [1990] 32 ITD 295, wherein it has been held that if the sales-tax was not debited in the profit and loss account or no provision for the amount was made, it could not be disallowed under section 43B of the Income-tax Act. 13. The learned counsel reiterated that the assessee has already paid the purchase tax for which it is entitled for the set off. By drawing my attention to the decision of the Gujarat High Court in the case of State of Gujarat v. D.K. Patel Co. [1975] 35 STC 63, he pointed out that the set off under rule 41 partially or totally extinguishes the tax liability of an assessee and, therefore, such set off can legitimately be considered as the sum paid. In this decision, the learned counsel pointed out, the provisions of Bombay Sales-tax Act and the rules made thereunder were examined. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: "42. Drawback, set off, refund, etc.-The State Government may by rules provide, that- (a) in such circumstances and subject to such conditions as may be specified in the rules, a draw back, set off or refund of the whole or any part of the tax- (i) paid or levied or leviable under any earlier law in respect of any earlier sales or purchases of goods which are held in stock by a dealer at the commencement of this Act, be granted to such dealer; or (ii) paid or levied or leviable in respect of any earlier sale or purchases of goods under this Act or any earlier law, be granted to the purchasing dealer; or (iii) paid or levied or leviable under the Maharashtra Tax on Entry of Motor Vehicles into Local Areas Act, 1987, be granted to a dealer whose principal business is of buying or selling motor vehicles. (b) for the purpose of the levy of tax under any of the provisions of this Act, the sale price or purchase price shall in the case of any class of sales or purchases be reduced to such extent, and in such manner, as may be specified in the rules." Under the said provisions, the State Government has enacted rule 41D and rule 43 of the Bombay Sales-tax Rules, 1959. Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arried forward for the next year. The precise amount which is to be carried forward for the next year can be ascertained only during assessment, since it is practically impossible to ascertain the exact quantum of the sales-tax set off portion in the items lying unutilised for manufacture as at the end of the year. Before the accounts are finalised in all respects, it is impossible to find out the element of sales-tax set off that can be claimed by the assessee on the items lying in stock, since it will be a very lengthy and cumbersome process to ascertain the exact figure and hence, certain estimated figures based on certain pro rata calculations are disallowed by the sales-tax department normally. In view of this also, the amount of sales-tax set off claimed and actually allowed may differ. (iv) In case there are certain bills from suppliers who have given either invalid/bogus registration on numbers, sales-tax set off thereon will not be allowed by the sales-tax department. The amount that may be disallowed on this ground can also be ascertained only at the time of assessment. (v) Under rule 41D, the sales-tax set off allowed cannot also be calculated precisely on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the provisions of section 43B are not applicable to the facts of the case. In fact, the real controversy in the case before me is not one of disallowance of expenditure under section 43B or otherwise, but one of the assessment year in which the amount of sale/purchase tax set off is to be accounted for as income of the assessee. The amount of set off is ascertained, adjudicated and finally allowed by the competent sales-tax authority in the sales-tax assessment order as and when it is passed. Till such assessment order is; passed in the sales-tax proceedings, the assessee's claim of set off is only incohate and is neither finally determined nor adjudicated. Thus, the right of an assessee to its claim of sales-tax set off becomes cohate and finally available to him only when an assessment order for the year is passed in the sales-tax proceedings. 18. The Learned Judicial Member in his order has referred to various decisions of the Income-tax Appellate Tribunal of Bombay Benches, Ahmedabad Benches and even Pune Bench. All these decisions are in favour of the assessee. No contrary decision has been brought to my notice. In all these decisions, which need not be mentioned by me b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Tribunal to revise the decision given earlier by that very Tribunal. The effect of revising this decision should not lead to injustice and the Court must always be anxious to avoid injustice being done to the assessee. If the Court is satisfied that by depriving the assessee of his rights under the later decision in an earlier year, the assessee lost an important advantage or lost some benefit which he could have got under the Income-tax Act, then the Court may take the view that departing from the earlier decision leads to injustice or denial of justice and the Court may prevent an Income-tax Authority from doing something which would be unjust and inequitable." This view has again been reiterated by the Full Bench of the Bom bay High Court in the case of CIT v. Nirmal Commercial Ltd [1995] 213 ITR 361. It bears repetition that the claim of the assessee has been accepted by the Tribunal for the assessment years 1978-79 to 1983-84, 1984-85 and 1986-87 and accepted by the department for 1989-90. The income on account of set-off for the year under consideration has already been brought to tax by the revenue in the assessment year 1988-89, which order has become final. Thus, t ..... 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