TMI Blog2016 (10) TMI 1269X X X X Extracts X X X X X X X X Extracts X X X X ..... n the hands of the assessee. The tax so retained by the assessee is in the nature of a loan given by the Government as an incentive for setting up the industrial unit in a rural area. The said loan had to be repaid after 15 years. Again, it is an incentive. By a subsequent scheme, a provision was made for premature payment. When the assessee had the benefit of making the payment after 15 years, if he is making a premature payment, the said amount equal to the net present value of the deferred tax was determined and on such payment the entire liability to pay tax/loan stood discharged. Again, it is not a benefit conferred on an assessee. Therefore, section 41(1) of the Act is not attracted to the facts of this case. Hence, the Tribunal wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... psum or in installments. However, Government through a G.O.No.48 had allowed an option to persons taking the benefit of deferral scheme, to pay the deferred tax in one lumpsum at the discounted rate of 8%. In other words it allowed premature payments of the due amounts at a sum discounted at the rate of 8%. Assessee availed this scheme and against the deferred tax of ?5,79,43,346/- for the period 1.4.2006 to 31.08.2007, it made actual payment of ?3,58,79,527/-, taking advantage of the 8% discounting. In other words, assessee received a rebate of ?2,20,63,819/-. Ld. Assessing Officer was of the opinion that assessee the benefit received by assessee fell within Sec. 41(1) read alongwith section 28(iv) of the Act. He made an addition of ?2,20, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther refund of excise duty could be considered as profit chargeable u/sec. 41(1) of the Act. Both the said cases had nothing to do with premature payment effected at discounted under a sales tax deferral scheme. As against this, the observation of Karnataka High Court in the case of M/s. Mcdowell Co Ltd (supra) relied on by the ld. Commissioner of Income Tax (Appeals) for giving relief to the assessee read as under:- 12. In the instant case, as per the scheme he was allowed to retain the sales tax as determined by the competent authority and pay the same 15 years thereafter. The tax collected was deemed to have been paid and, therefore, the tax so collected cannot be construed as income in the hands of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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