9911796707
TMI Blog2017 (3) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... tax loan liability which was claimed by the assessee as capital receipt. The Assessing Officer rejected the claim of assessee and made addition on the premise that waiver of sales tax liability tantamounts to cessation of liability and hence, taxable u/s. 41(1) of the Act. 2. The brief facts of the case as emanating from records are: The assessee is engaged in manufacturing, distribution and sale of iron and ferrous powders. The Assessing Officer vide draft assessment order dated 11-03-2014 inter alia made addition of Rs. 1,66,76,021/- u/s. 41(1) of the Act on account of cessation of sales tax liability. Aggrieved by the draft assessment order, the assessee filed objections before the Dispute Resolution Panel (DRP). The DRP rejected the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 2004-05 decided on 16-09-2013 by following the decision of Special Bench of the Tribunal in the case of Sulzer India Ltd. Vs. Joint CIT (supra) has dismissed the appeal of the Department. The ld. AR pointed that during the proceedings before the DRP the assessee had placed reliance on the decision of Special Bench of the Tribunal in the case of Sulzer India Ltd. Vs. Joint CIT (supra). However, the DRP without considering the same upheld the addition. 4. On the other hand Shri Naresh Kumar representing the Department fairly admitted that the issue raised in the present appeal by the assessee is covered by the decision of Hon'ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Sulzer India Ltd. (supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Special Bench held, "that the deferred sales tax liability of Rs. 4,14,87,985/- being the difference between the payment of the net present value of Rs. 3,37,13,393/- against the future liability of Rs. 7,52,01,378/- credited by the assessee under the capital reserve account in its books of account is a capital receipt and cannot be termed as remission/cessation of liability and consequently, no benefit has arisen to the assessee in terms of section 41(1)(a) of the Income-tax Act." The Department carried the matter in appeal before the Hon'ble High Court. The substantial question of law for adjudication before the Hon'ble High Court was : "(a) Whether, on the facts and in the circumstances of the case and in law, the Tribunal is just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es tax collected from the customers or consumers to the Government not immediately but as agreed after 7 to 12 years. If the amount is not to be immediately paid to the Government upon collection but can be remitted later on in terms of the scheme, then we are of the opinion that the exercise undertaken by the Government of Maharashtra in terms of the amendment made to the Bombay Sales tax Act and noted above, may relieve the assessee of his obligation but that is not by way of obtaining remission. The worth of the amount which has to be remitted after 7 to 12 years has been determined prematurely. That has been done by finding out its net present value. If that is the value of the money that the State Government would be entitled to receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission or cessation thereof. As rightly noted by the Tribunal, the sales tax collected by the assessee during the relevant year amounting to Rs. 7,52,01,378 was treated by the State Government as loan liability payable after 12 years in 6 annual/equal installments. Subsequently and pursuant to the amendment made to the fourth proviso to section 38 of the Bombay Sales tax Act, 1959, the assessee accepted the offer of the SICOM, the implementing agency of the State Government, paid an amount of Rs. 3,37,13,393 to the SICOM, which, according to the assessee, represented the net present value of the future sum as determined and prescribed by the SICOM. In other words, what the assessee was required to pay after 12 years in 6 equal installments ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
