TMI Blog2009 (8) TMI 1197X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,71,544 on account of prior period expenses. 3. On the facts and in the circumstances of the case, the Ld. Commissioner of Income-tax (Appeals) XI, Ahmedabad ought to have upheld the order of the Assessing Officer. 4. It is therefore prayed that the order of the Ld. Commissioner of Income-tax (Appeals) XI, Ahmedabad may be set aside and that of the Assessing Officer be restored. 2. Apropos Ground No.1, the facts relevant are that it was noticed by the Assessing Officer that out of sales-tax deferment of ₹ 629.26 lakhs as shown as outstanding in balance sheet, liability to the extent of ₹ 42.21 lakhs pertained to previous year relevant to the assessment year under consideration. The Assessing Officer as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s tax liability into loan during the previous year itself and therefore, it is not established that the deferment had actually been allowed during the previous year itself. The letter produced by the assessee has been issued by the Sales-tax department as late as on 23.03.2007 and it did not indicate the actual date of conversion of deferment of Sales-tax liability of ₹ 42.21 lakhs. In view of this clear fact, the Sales-tax liabilities claimed by the assessee are hit by the provisions of Section 43B of the Act and the same is disallowed. With due respect to the decisions relied by the assessee, the facts in those cases are not similar to the assessee s case and therefore, the same are not applicable. The amount ₹ 42.21 lakhs is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s order. Form No. D as in Gujarat Government is not applicable to unit in Karnataka Government. Hence, the A.O. is directed to delete the disallowance made by him. Therefore, this ground of appeal is allowed. 4. Heard both parties and perused the material on record. To resolve the controversy, we may first refer to Circle No.496 (F.No.201/34/86-IT(A-II) dt.25.9.1987, which is reproduced as under : Several State Governments have introduced sales-tax deferral schemes as a part of the incentives offered to entrepreneurs setting up industries in back-ward areas. Under these schemes, eligible units are permitted to collect sales-tax and retain such tax for a prescribed period. After this period, the sales-tax is to be paid to the Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Board have decided that where amendments are made in the sales- tax laws on these lines, the statutory liability shall be treated to have been discharged for the purposes of s. 43B of the Act. 6. The CITs may bring the contents of this Circular to the notice of all the officers working under them. SOURCE : [Reported in (1988) 68 CTR (St) 109 : (1988) 169 ITR (St) 53] 5. From the above circular it is crystal clear that the Ministry of Law has opined that if the State Governments make an amendment in the Sales Tax Act to the effect the sales tax deferred under the scheme shall be treated as actually paid, such a deeming provision will meet the requirements of section 43B. This circular has been explained by the Tribunal in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditions as the State Government may, by general or special order specify, where a dealer to whom incentives by way of deferment offered by the State Government in its orders issued from time to time has been granted by virtue of eligibility certificate and where liability equal to the amount of any such tax payable by such dealer has been created as loan by the Department of Industries and Commerce, Government of Karnataka, then such tax shall be deemed, in public interest, to have been paid. (2) Notwithstanding anything contained in this Act, the deferred payment of tax under sub-section (1) shall not attract penalty under clause (ii) of subsection (2) of section 13, provided the conditions laid down for payment of the tax deferred are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relates to deletion of the addition of ₹ 1,71,544 made on account of prior period expenses. 8. The learned DR contended that the Assessing Officer made the impugned addition on the ground that though the expenses were crystalised in past but bills were received late and payments were made in the Assessment Year under consideration, the learned CIT(A) is not justified in allowing the same. The learned DR, on the other hand, supported the impugned order of the learned CIT(A) and contended that the learned CIT(A) is justified in his action since the expenses in question were crystalised during the Assessment Year under consideration. 9. Having heard both sides, we have carefully gone through the impugned orders of the authorities b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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