TMI Blog2018 (5) TMI 1019X X X X Extracts X X X X X X X X Extracts X X X X ..... alaganesh, AM For The Appellant : Shri B.K.Poddar, FCA For The Respondent : Shri Saurabh Kumar, Addl. CIT, Sr.DR ORDER Per M.Balaganesh, AM 1. This appeal by the assessee arises out of the order of the Learned Commi543/CIT(A)-4/Circle-12/Kol/14-15 dated 16.05.2016 against the order passed by the A.C.I.T., Inv.Circle-3(2), Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short the Act ) dated 15.03.1996 for the Assessment Year 1993-94. 2. The first issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in confirming the disallowance of ₹ 39,29,928/- u./s 43B of the Act on account of unpaid sales tax in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee M/s Teesta Agro Industries Ltd which was earlier known as Sunderban Fertilisers Ltd was in receipt of ₹ 39,29,928/- under sales tax deferment scheme sanctioned by the Government of West Bengal, meaning thereby the sales tax collected by the assessee need not be remitted to the sales tax authorities for a certain period of time. Accordingly the assessee did not make any remittance of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngal Sales Tax Act 1954 vide section 8H deferment payment of tax which is reproduced hereunder:- 1 [ 8H. Deferment of payment of tax . - (1) Notwithstanding anything contained in sub-section (1) or sub-section (2) 2[ ] of section 8 or sub-section (1) of section 10, the tax payable by a registered dealer under this Act according to his 3[ ] returns referred to in section 8 or the tax due from him according to a notice issued under sub-section (1) of section 10 shall, subject to the other provisions of this section or the rules made thereunder, be deferred. ( a) in the case of a newly set up industrial unit in [West Bengal.] from the prescribed date on which such tax becomes payable in a year during the period referred to in sub-section (2) under this Act in respect of notified commodity other than such notified commodity as may be prescribed,] manufactured in such unit or goods purchased for use directly in the manufacture of such notified commodity, or ( b) In the case of. an existing industrial unit in 1 [West Bengal.] which has been expanded on approval of the State Government, from the prescribed date on which such tax becomes payable in a year du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tries in backward 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 Government either in lump sum or in instalments. 2. Section 43B of the Income-tax Act, 1961, introduced by the Finance Act, 1983, with effect from 1-4-1984 provides, inter alia, that a deduction in respect or any sum payable by the assessee by way of tax or duty under any law for the time being in force shall be allowed from the income of the previous year in which such sum is actually paid irrespective of the previous year in which the liability to pay such sum was incurred. Since the introduction of this provision, the asses sees who collect sales tax, but do not pay the amounts to the Government during the previous year, under the deferral schemes provided by the State Governments are not entitled to the benefit of deduction from their income. 3. Representations have been received from various State Governments and others that cases of deferred sales tax payments should be excluded from the purview of section 43B as the operation of this provision has the effect of diluting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme should be allowed as deduction tor the previous year in which the conversion has been permitted by the State Governments. 3. The Board have considered the matter and are of the opinion that such deferral schemes notified by the State Governments through Government Orders meet the requirements of the Boards Circular No. 496, dated 25-9-1987 in effect though in a different form. Accordingly, the Board have decided that the amount of sales tax liability converted into loans may be allowed as deduction in the assessment for the previous year in which such conversion has been permitted by or under Government Orders. Circular No. 674, dated 29-12-1993. In view of the above circulars of the CBDT which are binding on the revenue authorities and in view of the evidence submitted by the assessee that the sales tax had been converted into loan pursuant to provisions of the State Act i.e. West Bengal Sales Tax Act, the assessee is deemed to have complied with the provisions of section 43B of the Act and accordingly entitled for deduction of the same. Hence we have no hesitation to consider grant of deduction of ₹ 39,29,928/- u/s 43B of the Act on account of unpaid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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