TMI Blog2007 (1) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... . 260/Mds/97 with reference to the assessment year 1989-90. The above batch of references has been made under section 256(1) of the Income-tax Act, 1961, by the Income-tax Appellate Tribunal, Chennai Bench "B", at the instance of the Commissioner of Income-tax, Coimbatore, raising substantial questions of law, referred to and dealt with hereunder, arising out of the common order dated January 10, 1997, of the Income-tax Appellate Tribunal, Chennai Bench "B". In pursuance of the directions of this court, the Income-tax Appellate Tribunal has stated a case. T. C. (R) Nos. 87 of 2001 and 93 of 2001 (R. A. Nos. 253 and 259/Mds/97) with reference to the assessment years 1987-88 and 1993-94: In respect of T. C. (R) Nos. 87 of 2001 and 93 of 2001 with reference to the assessment years 1987-88 and 1993-94, the Tribunal has referred the following question of law for our consideration: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the amounts collected by the assessee from the lessees towards sales tax represented only contingent deposits?" During the relevant assessment years, the Assessing Officer added the contingent d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rentals in a writ petition filed by the assessee, the same has not been finally disposed of and in the case of a contractual liability, the liability will accrue only in the year in which the dispute is finally settled between the parties. But, the Commissioner distinguishes the said proposition with the statutory liability, as it is not even a case where the collection was made towards possible proceedings by the Sales Tax Department and it is the collection of a quantified amount as per the actual proceedings of the Sales Tax Department. The Commissioner, ultimately, held that though the assessee called it a contingent deposit, the same cannot be accepted because the customers when they paid the amounts they have paid with the awareness that what they paid is towards the possible sales tax on lease rentals and accordingly, held that as per section 43B of the Act, inasmuch as the collected amount has not been paid towards the credit of the Government, the disallowance has been rightly made. The Commissioner also observed that if the assessee ultimately succeeds in their dispute and refund the collected amount to the customers, it is open to them to claim the deduction of the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollected sales tax at 30 per cent. and retained it as a deposit without paying it to the State Government oh the ground that there was a dispute as to whether the ayurvedic medicines, viz., arishtams and asavas, manufactured by the assessee were subject to sales tax at 30 per cent. or 8 per cent. and after the decision of the apex court by judgment dated March 15, 1989, holding that the said medicines were taxable only at 8 per cent. with a direction to refund the excess amount to the customers to the extent it was possible and to donate the left over excess, which could not be refunded, to a charitable trust, this court finding that the amount collected by the assessee was clearly associated with a statutory liability and if such sales tax need not be paid, the said amount had either to be refunded to the customers or transferred to the charitable trust, but the same could not be taxed as a part of the trading receipt. But, the facts of the present case are totally different and are identical to the facts of the case in CIT v. Southern Explosives Co. [2000] 242 ITR 107 (Mad), which is relied upon by the Revenue. In the said case, the assessee was a dealer in explosive detonators ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by that if the assessee had not paid, such deposit can be disallowed under section 43B of the Act, as the assessee had not discharged his liability as per section 43B of the Act. Accordingly, the reference with regard to the question whether the amounts collected by the assessee from the lessees towards sales tax represented only contingent deposits is answered in the negative, in favour of the Revenue and against the assessee. T. C. (R) No. 88 of 2001 (R. A. No. 254/Mds/97) with reference to the assessment year 1988-89: In respect of T. C. (R) No. 88 of 2001 with reference to the assessment year 1988-89, the Tribunal has referred the following question of law for our consideration: "Whether, on the facts and in the circumstances of the, case, the Tribunal was right in law in holding that the amounts collected by the assessee from the lessees towards sales tax represented only contingent deposits and therefore quashing the directions of the Commissioner of Income-tax under section 263 on this issue?" Pursuant to the order of the Commissioner under section 263 of the Act, the Assessing Officer reopened the assessment for the assessment year 1988-89 and added the amounts c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... false ceiling, internal partition, etc., for the leasehold and freehold buildings as revenue in nature. On appeal, the Commissioner upheld the order of the Assessing Officer with regard to the last two issues and the first issue was not dealt with by the Commissioner. The Tribunal, on appeal by the assessee, held all the three issues in favour of the assessee. Hence, the present reference with the questions referred to above. The issue referred in the first question is already answered in T. C. (R) Nos. 87 and 94 of 2001 with reference to the assessment years 1987-88 and 1993-94. Accordingly, the reference with regard to the first issue is answered in the affirmative, in favour of the Revenue and against the assessee. With respect to the issue referred in the second question, viz., whether the assessee is entitled to revenue deduction under section 37(1) the expenditure incurred by it in partitions, false ceilings, etc., in their own premises, on an earlier occasion, a similar issue was referred at the instance of the Revenue before this court in CIT v. Ooty Dasaprakash [1999] 237 ITR 902, wherein this court held that the expenditure was incurred solely for repairs and moderni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive role. The subject must have a function in the trader's operation and if it has, it is, prima facie, plant, unless there is good reason to exclude it from that category." The Delhi High Court, in the said case, where the assessee, being a banking company, claimed depreciation and development rebate in respect of safe deposit lockers, held that lockers were the primary safety article of a bank used for the purpose of carrying on the trade and fell within the expression "plant" and accordingly, confirming the order of the Tribunal, answered the reference in favour of the assessee and against the Revenue. As the issue referred in the last question is already dealt with elaborately by the Delhi High Court in the decision cited supra, with which we are in full agreement, the reference is answered in the affirmative, against the Revenue and in favour of the assessee. T. C. (R) No. 90 of 2001 (R. A. No. 256/Mds/97) with reference to the assessment year 1990-91: In respect of T. C. (R) No. 90 of 2001 with reference to the assessment year 1990-91, the Tribunal has referred the following questions of law for our consideration: "1. Whether, on the facts and in the circumstances o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the similar issue in CIT v. Ooty Dasaprakash [1999] 237 ITR 902, the issue is answered in favour of the assessee. Following the same, the second issue is answered in the affirmative, in favour of the assessee and against the Revenue. With respect to the third issue also, in T. C. (R) No. 89 of 2001 for the assessment year 1988-89, the reference is answered in favour of the assessee and against the Revenue, agreeing with the views taken by the Delhi High Court in CIT v. Punjab and Sind Bank Ltd. [2000] 244 ITR 393. Hence, the reference with regard to the third issue is also answered in the affirmative, in favour of the assessee and against the Revenue. With respect to the last issue, viz., whether the expenditure incurred on false ceiling, partition, etc., in the assessee's lease hold premises were revenue in nature, the same issue was referred earlier to this court in CIT v. Dasaprakash [1978] 114 ITR 210, wherein the, issue was answered in favour of the assessee, holding that the expenses on decorated mirrors, plaster-moulded roof, plywood panels, etc., were incurred with a view to beautify the premises and to keep the place fit and hence, they cannot be said to be of an endu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 43B and also upheld the order of the Assessing Officer on the other two issues. On appeal, the Tribunal, following its earlier decision, held the issues in favour of the assessee. Hence, the present reference. The issue referred in the first question is already answered in T. C. (R) Nos. 87 and 93 of 2001 in favour of the Revenue. Hence, the reference with regard to the first issue is answered in the negative, in favour of the Revenue and against the assessee. With regard to the second issue also, in T. C. (R) No. 89 of 2001 for the assessment year 1988-89, following the earlier decision of this court on a reference made with regard to the similar issue in CIT v. Ooty Dasaprakash [1999] 237 ITR 902, the issue is answered in favour of the assessee. Following the same, the reference with regard to the second issue is answered in the affirmative, in favour of the assessee and against the Revenue. The third issue referred to above is also answered in T. C. (R) No. 89 of 2001 for the assessment year 1988-89, in favour of the assessee agreeing with the views taken by the Delhi High Court in CIT v. Punjab and Sind Bank Ltd. [2000] 244 ITR 393. Hence, the reference with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X
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