TMI Blog2013 (4) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... emed to be received in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year or (c) accrues or arises to him outside India during such year. Thus in order to form income of a person, the person must receive or deemed to receive any sum. The amount of luxury tax which was not received cannot form part of the income of any person. Section 43B of the Act is concerned with deduction claimed by the assessee. It does not caste duty on the assessee to realize the various amounts mentioned in it. In case, where a person has not realized luxury tax from the customers then under the law he being liable to pay it and it will be realize from him under the relevant law irre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... system." 2. The facts giving-rise to this reference are that M/S U.P. Hotels Pvt. Limited, 10/252, Maqbool Alam Road, Varanasi (the respondent) is a public limited company, and engaged in the hotel business. The respondent owned (i) Hotel Clarks Shiraz, Agra, (ii) Hotel Clarks Avadh, Lucknow and (iii) Hotel Clarks Amer, Jaipur. In the present reference, the question relates to addition of the amount of "luxury tax" payable by the respondent for the Assessment Years 1987-88 and 1988-89 under U.P. Taxation and Land Revenue laws Act, 1975 as such facts in relation to luxury tax alone are noticed in the judgment. 3. The respondent filed it's income tax return for the Assessment Year 1987-88 on 26.06.1987 showing profit of Rs. 64,20,868/- Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in part and the addition made in this head was deleted. 4. The respondent filed its income tax return for the Assessment Year 1988-89 on 28.06.1988 showing income of Rs. 17,30,187/- This income was adjusted against unabsorbed carried forward loss and depreciation. The Assessing Officer on scrutiny of balance sheet, noticed that luxury tax of Rs. 6,85,057/- was payable on the total gross income at the rate 7%. Similarly credit balance of Rs.1,95,295/- was payable by Lucknow Unit and there was debit of luxury tax of Rs. 2,28,426/- Thus total credit balance of Rs. 6,51,926/- is payable on the account of luxury tax. The Assessing Officer required the respondent to explain as to why this amount be not added in the gross income of the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Bansal for the respondent. Sri Upadhyay submitted that Section 43B of the Act provides that deduction shall be allowed only on actual payment of any sum payable by way of tax. Luxury tax is payable by the respondent under Section 4 of U.P. Taxation and Land Revenue laws Act, 1975 read with Rule-3 of U.P. Luxuries (In Hotel) Tax Rules, 1975. As the respondent has not made actual payment in this head as such the amount of luxury tax which was payable by the respondent was liable to be added in his gross income. He relying upon the judgment of Supreme Court in Chowringee Sales Bureau (p) Ltd. Vs. Commissioner of Income Tax, 1973 (87) ITR 542 and Sundaram Finance Ltd. Vs. CIT, 2012 (10) SCC 430 submitted that the amount of tax collected but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. This Section imposed a condition that such deduction be allowed only in case of actual payment of the liabilities mentioned therein by the assessee . Section 43B of the Act is concerned with deduction claimed by the assessee. Thus the scope of inquiry by the Assessing Officer under Section 43B of the Act is as to whether the assessee can be allowed deduction which can only be allowed to the assessee when it has liability to pay under the law and has actually paid that amount. The question of addition will arise only when the assessee has claimed deduction and the Assessing Officer founds that conditions mentioned in this section has not been satisfied. In this case the respondent has not claimed any deduction in respect of its liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06.09.2012 (which statement is ordered to be taken on record and marked "X"), the said sum of Rs 36,47,585 was not kept in a separate interest-bearing bank account but it formed part of the business turnover. In view of the said statement, we see no reason to interfere with the impugned judgment. Applying the substance over form test, we are satisfied that in the present case the said sum of Rs 36,47,585 constituted income. The said amount was part of the turnover. The said amount was collected from the customers. The said amount was collected towards sales tax liability. The said amount formed part of the turnover." 11. In view of the aforesaid discussions, the question referred to in this reference is answered in the affirmative i.e. ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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