9911796707
TMI Blog2000 (1) TMI 962X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 to April 30, 1995 and from May 1, 1995 to March 31, 1996 was less than Rs. 5 lakhs and it was accordingly entitled to get the tax exemption under rule 3(116) of the 1941 Rules during the first period and under rule 41 of the 1995 Rules during the other period. The firm alleges that the Assistant Commissioner of Commercial Taxes, Barasat Charge, District: North 24-Parganas (respondent No. 1) assessed the firm for the period from April 1, 1995 to April 30, 1995 fixing Rs. 3,14,500 as tax including turnover tax (TOT) of Rs. 25,500 and also assessed interest of Rs. 2,26,440. For the period of May 1, 1995 to March 31, 1996 tax was assessed at Rs. 24,87,374 and an interest of Rs. 13,62,557 was levied. The firm alleges that in making such assessment the respondent No. 1 rejected its (firm's) claim for tax exemption under rule 3(116) of the 1941 Rules and rule 41 of the West Bengal Sales Tax Rules, 1995. According to the firm, the turnover tax should have been at 1 per cent and not at 1.5 per cent because the turnover during the relevant periods did not exceed Rs. 1 crore and that the said respondent erred in rejecting the books of accounts of the firm and in assessing the firm's gross t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral points, in regard to the legality and correctness of assessments, Mr. M.L. Bhattacharyya, learned Senior Counsel for the firm, has concentrated his argument on the applicability of rule 41 of the 1995 Rules and rule 3(116) of the 1941 Rules. According to him, the investment in plant and machinery of an industrial unit in a particular year is the same as the depreciated value of the plant and machinery as it stands in that year. He points out that the assessing officer gave allowance for depreciation in the value of the plant and machinery in fixing the value of such plant and machinery, as it stood on March 31, 1980, at Rs. 2,27,148.78 and then took into consideration the cost of new additions to the plant and machinery up to the accounting year 1986-87; but without allowing the benefit of the depreciation for these years. He contends that once the said officer deemed it proper to give allowance for depreciations for some period, there is no ground why such benefit should not be allowed for other periods. 4.. If Mr. Bhattacharyya's contention is accepted, investment in plant and machinery for a particular period becomes synonymous with their depreciated value, as it stood dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground by the Supreme Court. When a person speaks of his investment in a venture, he refers to the money initially put in by him into such venture together with what he might have subsequently put into augment the magnitude of the venture. Let us take a hypothetical case where a person builds a house investing a sum, say Rs. 4 lakhs. If at some point of time, after a couple of years, due to price escalation, the price of the building goes up to Rs. 14 lakhs (without new investment being made), the person is not expected to say that his investment in the building is Rs. 14 lakhs. Thus price escalation or reduction due to passage of time alone has nothing to do with investment unless investment itself is augmented in the meantime by new investment. Very pertinent is the expression "investment by such dealer in plant and machinery" as appearing in rule 41 of the 1995 Rules as well as in rule 3(116) of the 1941 Rules. This clearly indicates that investment within the meaning of these Rules is what actually the dealer has put in for plant and machinery as industrial unit and this has nothing to do with the depreciation in the plant and machinery envisaged in the accounting system ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, 1995 to April 30, 1995 has mentioned that since no manufacturing account was produced, the books of accounts could not be accepted. Even in their grounds for appeal (vide annexure "D" at page 34 of the application) the applicant has not disputed this. The only plea in this regard is that "had the assessing authority taken the burden of applying his mind to purchase and sale vouchers and production particulars, he could have ascertained the correctness of the books of accounts of the applicant-petitioner". This plea is wholly against the basic principle of accounting system. The books of accounts are to contain a systematic classification and analysis of the figures relating to sale, purchase, manufacture, etc., available from relevant vouchers and other documents. Such figures, contained in the vouchers and documents, when cast into the books of accounts, give out the true picture of the business activity of the concern. No doubt these vouchers and documents are necessary for verification of the correctness of the entries in the books of accounts. But in the absence of relevant registers maintained according to the accounting system, it is not possible to make out, from the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment should be based on something or some material which has nexus with the amount arrived at as gross turnover". With reference to the expression "judgment" in section 11(1) of the 1941 Act this Tribunal has held in the second reported case that "the expression dispels the idea of capricious or arbitrary conclusion and indicates that in making an assessment under this section [i.e., section 11(1)] the assessing authority must apply his mind, must come to a logical conclusion giving an express reasoning leading to the decision". In both the cases the respective assessing officer fixed the gross turnover of their respective assessee much higher than the gross turnover admitted by the assessee, without any rhyme or reason. In the second reported case, the assessing officer had before him the past assessment figures which could have served as the logical basis for assessing the trend of the business in arriving at the gross turnover. In that case the assessee brought to the notice of this Tribunal the assessment of gross turnover in three previous years and the Tribunal found that the gross turnover fixed by the assessing officer in the impugned assessment was abnormally high in c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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