TMI Blog2017 (11) TMI 1626X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1987. The aforesaid approach of the High Court is without any blemish, inasmuch as all the requirements of Section 41(1) of the Act could not be fulfilled in this case. - Civil Appeal No. 19587 of 2017 and others† - - - Dated:- 21-11-2017 - A.K Sikri And Ashok Bhushan, JJ. ORDER 1. With the consent of the parties, we have heard the arguments in the matters finally. 2. Leave granted. 3. The Department has filed these appeals against the judgments of the Bombay High Court passed in various cases whereby the High Court has concurred with the view taken by the Income Tax Appellate Tribunal (hereinafter referred to as the 'Tribunal') and held that the amount in question could not be treated as income under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted the balance amount of ₹ 4,14,87,985/- and credited the said amount to its capital reserve account. The Assessing Officer asked the Assessee to show cause as to why the said amount should not be taxed in the hands of the Assessee as a revenue receipt. Relying on Circulars of the Central Board of Direct Taxes being Nos. 496 and 674, the Assessee claimed that the deferral Sales Tax under the Deferral Scheme was required to be treated as actually paid for the purposes of section 43B of the I.T. Act. Further, the conversion of Sales Tax liability into loans would be taken as discharge of the liability of Sales Tax and, therefore, the deferral amount was in the form of a loan and not a trading receipt. On this basis, the Assessee cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment of Maharashtra promoted premature or payment of deferral sales tax at Net Present Value (NPV). 8. In the meantime, section 38 of the Sales Tax Act was amended which provides that where the NPV of deferred tax as may be prescribed was paid, the deferred tax was deemed to have been paid. Taking advantage of this Scheme, the assessee made repayment of ₹ 3,37,13,393/- against the total liability of ₹ 7,52,01,378/-. In this manner, the assessee could save a sum of ₹ 4,14,87,985/-. The issue is as to whether this amount, which the assessee could save, is to be treated as 'income' by applying the provisions of Section 41 of the Act. The Assessing Officer treated it as the revenue receipt and thereby income. Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g liability. In this case, the scheme under which the Sales Tax liability was deferred enables the Assessee to remit the Sales 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of such loss and expenditure or obtained a benefit in respect of such trading liability by way of a remission or cessation thereof. As rightly noted by the Tribunal, the Sales Tax collected by the Assessee during the relevant year amounting to ₹ 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 4th proviso to section 38 of the Bombay Sales Tax Act, 1959, the Assessee accepted the offer of SICOM, the implementing agency of the State Government, paid an amount of ₹ 3,37,13,393/- to SICOM, which, according to the Assessee, represented the NPV of the future sum as determined and prescribed by the SICOM. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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