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2016 (1) TMI 781 - ITAT MUMBAI

2016 (1) TMI 781 - ITAT MUMBAI - TMI - Disallowance of interest on delayed payment on excise duty or delayed payment of sales-tax - Held that:- These are more or less compensatory in nature and cannot be held as any infraction or violation of any law. Such a payment of interest on delayed payment or excess credit also cannot be disallowed as it is pure compensatory and accordingly, the order of the CIT(A) on this score is reversed. We find that the Tribunal in assessee’s own case for AY 2005-06 .....

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the revenue and cross appeal by the assessee against impugned order dated 23.03.2010, passed by CIT(A)-9, Mumbai for the quantum of assessment passed u/s 143(3) for the assessment year 2007-08. We will first take-up revenue s appeal in 4985/Mum/2011 vide which following ground has been raised:- Whether on the facts, in the circumstances and in law, the Ld. CIT(A) erred in directing to delete the addition of ₹ 5.29 Crores made by the AO on account of gain on settlement of Sales Tax Deferral .....

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457 allowed this issue. Further, this decision of the Special Bench has now been approved by the Hon ble High Court in a very detailed judgment vide order dated 5th December, 2014. 3. Before us, the Ld DR, though admitted that this issue is covered by the decision of the Hon ble High Court, however the revenue wish to raise revised / additional grounds dated 14.08.2012 which was similar to the ground raised in the appeal of M/s Gujarat Consumer Products in ITA No. 4103/Mum/2010 and Cos 112 & .....

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nature, the said grounds however for sake of ready reference are reproduced hereunder :- (1) "On the facts and in the circumstances of the case and in law, the remission of sales tax liability, though confirmed u/s.41(1) of the I. T. Act is alternatively liable to be taxed under other provisions of the I. T. Act." (2) "On the facts and in the circumstances of the case and in law, the remission of sales tax liability which was worked out at a particular rate of interest for the per .....

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iability rather than the trading liability, which itself raises the following two questions: (a) whether this issue means that trading liability of assessee ceases to exist? (b) In case of some remission, whether amount remitted is taxable u/s.41(1) or u/s.28(iv) or under any other provisions of the I. T. Act?" (c) (4) "Whether the ITAT was correct in deciding the issue in favour of the assessee based on decision of Suzler Ltd., holding that section 41(1) is not applicable because remi .....

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ished feature of present case with that of Suzler's case. One more question arises here which also distinguishes this case from Suzler Ltd. that whether section 41(l) is to be invoked on the basis of difference between existing liability and the amount at which it has been settled or the difference between the existing and future liability?" (5) "Moreover, in regard to applicability of section 28(iv), which may be only applicable where benefit is received, in which benefits was int .....

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isen in the normal course of business and is out of business operation and u/s.28(i) and 28(iv) of the LT. Act, which is straightway taxable. This is because sales tax receipt is part of trading receipt and sales tax payment is a trading liability. Reduction in trading liability is profit under normal course of business." (7) "By conversion of sales tax into loan, the assessee gets the right to retain government money for the particular number of years without any interest liability, w .....

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and later on through clarificatory Circular No.674 dated 29-12-1993 stated that the statutory liability of sales tax shall be treated to have been discharged for the purpose of section 43B. Further, the Board clarified that section 43B will not be invoked if unpaid sales tax is converted into loan. It is very categorically made in the Circular that conversion into loan may be allowed as deduction in the year in which conversion was made and that sales tax would be treated to have been paid for .....

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onversion." Now, in wake of the detailed decision of the jurisdictional High Court, all these arguments and grounds raised by the revenue have not much consequence, however we are admitting the said grounds purely on academic grounds. But we are of the opinion that the only issue involved here is addition of ₹ 5.29 crores on account of settlement of sales-tax deferral loan which issue is now squarely covered by the decision of Hon ble jurisdictional High Court. Therefore, respectfully .....

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f expenditure of ₹ 4,22,692/- being foreign travel expenses incurred on the spouse of Chairman, same are covered against the assessee in assessee s own case for assessment year 2006-07. 7. After considering the finding given in the impugned order and order of the Tribunal in the earlier years we find that these issues have been decided against assessee, therefore, respectfully following the judicial precedence for the earlier years, ground no. 1 and ground no. 2 are treated as dismissed. 8 .....

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77; 35,666/- 10. Before us, Ld. Counsel submitted that interest for delayed payment of excise duty and sales-tax on supplementary invoices cannot be treated as penalty or for any violation of law. In fact, the Tribunal in assessee s own case for the AY 2005-06 and 2006-07 on similar nature of disallowance of interest has decided this issue in favour of the assessee. 11. On the other hand, Ld. DR relied upon order of the CIT(A) who has confirmed the disallowance made by the AO. 12. After consider .....

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