TMI Blog1992 (1) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... also held that the aforesaid rolled products manufactured by the assessee were liable to regulatory duty of excise under Notification No. 144/72 Central Excises, dated May 28, 1972, in addition to basic excise duty as aforesaid. Being aggrieved by the order passed by the Assistant Collector and the Superintendent of Central Excise, Bhavnagar, the assessee went in appeal before the Appellate Collector of Central Excise, Bombay. The Appellate Collector held that there was no warrant to interpret serial No. (1) of Notification No. 206/63-Central Excises, dated November 30, 1963, as amended by Notification No. 123/65-Central Excises, dated August 14, 1965, by restricting its scope only to those ingots which, before cutting or breaking, do not resemble any of the items mentioned in sub-item (i) of item No. 26AA of the relevant Schedule. He, therefore, held that re-rolled products manufactured by the assessee from scrap-based ingots produced in electric arc furnaces when cut or broken so as to resemble the shape of any product mentioned in sub-item (i) of item No. 26AA of the relevant Schedule are exempt from payment of duty under Notification No. 206/63-Central Excises, dated November 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the said amount under the order of the Appellate Collector passed on January 8, 197. According to the Income-tax Officer, since the Appellate Collector had passed the order under which the assessee had become entitled to the refund of the aforesaid amount of excise duty in the year of account, which ended on March 31, 1974, relevant to the assessment year 1974-75, the said amount was liable to be included in the assessee's total income for the said assessment year 1974-75. Being aggrieved by the order of the Income-tax Officer, the assessee went in appeal before the Appellate Assistant Commissioner of Income-tax. It was urged before the Appellate Assistant Commissioner that though the assessee had become entitled to the refund of the aforesaid amount of excise duty under the order of the Appellate Collector of Central Excise, the Central Government had not accepted the stand taken by the Appellate Collector of Central Excise and sought to set aside his order in exercise of its powers under section 36(2) of the Excise Act. The assessee was refunded the aforesaid amount of excise duty only on April 30, 1976. In these circumstances, it was urged on behalf of the assessee that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion or cessation thereof, the amount obtained by him or the value of benefit accruing to him, shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not." Section 41 is in a group of sections, namely, sections 30 to 43A, which group, according to section 29, provides for the manner in which income under the head "Profits and gains of business or profession" referred to in section 28 of the Act has to be computed. Section 41(1) provides that, where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee, and, subsequently, during any previous year the assessee has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by him or the value of benefit accruing to him, shall be deemed to be profits and gains of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c of the sales tax law. The question which arose for consideration was whether the word "obtained" occurring in section 41(1) means actually obtained or means obtainable, or when the assessee became entitled to obtain the same? That was the question which was considered in the light of the sales tax law. It was contended on behalf of the assessee that the decision of this court in CST v. Sumatilal Popatlal and Co. [1964] 15 STC 498 was to the effect that, under the law, no sales tax was payable in respect of sales of hessian and it, therefore, became clear according to that decision, which was not challenged by way Of further appeal to the Supreme Court, that the amount of Rs. 42,945 which the assessee had paid to the sales tax authorities in the earlier years had no basis in law so far as the Government was concerned and the amount had been collected from him without the proper authority of law in that behalf. Relying on the decision of the Supreme Court in Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363, it was urged that the liability to pay sales tax arose the moment sale was made and it was on that footing that, in the previous year, sales tax had been paid by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It would thus be clear that the Division Bench of this court did not accept the assessee's contention that, since the assessee was maintaining accounts on mercantile basis, he could have made the relevant credit entries in his books of account in connection with the amount of Rs. 42,945 on December 5, 1962, the date on which the judgment of this court in the case of CST v. Sumatilal Popatlal and Co. [1964] 15 STC 498 was pronounced irrespective of the date when the amount was actually received. Under these circumstances, the view taken by the Tribunal that the material date was December 5, 1962, the date on which the judgment of this court was pronounced in CST v. Sumatilal Popatlal and Co. [1964] 15 STC 498 was not held to be correct. It was observed that it was no doubt true that by virtue of that judgment, it became possible for the assessee to claim refund of the sales tax amounts paid in the past but by merely getting a right to claim the refund, he had not obtained the amount of the refund. The amount of refund was obtained only after the Sales Tax Officer passed the order of refund on August 19, 1965, and it was only on that date that it could be said that the assessee ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment for any earlier assessment year and, therefore, section 41(1) was not applicable. The Division Bench of this court held that, whenever any sale takes place, whether the price quoted to the purchaser includes sales tax or whether sales tax is separately collected, the sales tax forms part of the consideration for the sale and it forms part of the turnover of the seller. The amount of the sales tax payable in respect of the sales effected by a particular assessee forms part of his trading receipts and has to be shown on the credit side. As and when he pays the sales tax to the authorities, he can claim deduction for the sales tax paid ; in case he has to refund the sales tax to the original purchaser who purchased the goods from him, then the amount so refunded will also be a deduction which he can claim and it must be granted to him, that being deduction on the expenditure side. Therefore, in that case, the assessee-firm which was maintaining its accounts on mercantile basis was bound to show as trading receipt all the amounts which accrued due to it or which were collected by it as sales tax and it was bound to show on the debit side of the accounts, the amounts which it paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. The right to receive the refund in the sum of Rs. 42,263 arose by virtue of a direction given by the Madhya Pradesh High Court but when the matter was taken in appeal, by virtue of interim orders passed in that matter, the right to receive the amount was subject to furnishing a bank guarantee and it became matured and was crystallized only when the Supreme Court decision was delivered. Under these circumstances, it was only Samvat year 2020 in the course of which the Supreme Court judgment was delivered on January 20, 1964, that can be said to be the previous year in the course of which the right to refund accrued. It was held that, in view of section 41(1), it was the previous year in the course of which the right to receive the amount of Rs. 42,263 by way of refund accrued to the assessee and the provisions of section 41(1) were, therefore, applicable and it was the assessment year 1965-66, the previous year being Samvat year 2020, which was the year in which the amount of refund could be brought to tax under section 41(1). It would thus be clear from the judgment that the system of account keeping followed by the assessee was considered to be relevant for the purpose of dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the mercantile system and adopted the calendar year as its accounting period, owned a factory at Bombay. On August 6, 1948, its stock-in-trade, machinery and buildings were destroyed by fire. On March 27, 1950, the company received the sum of Rs. 65 lakhs from the insurers in respect of the loss, out of which the sum of Rs. 27,06,593 represented the deemed profits under the fourth proviso to section 10(2)(vii) of the Indian Income-tax Act, 1922. The Income-tax Officer included the sum in the taxable income of the respondent for the assessment year 1949-50, on the ground that it became " receivable " in the relevant calendar year, because the insurers accepted the respondent's claim on December 13, 1948. The Supreme Court held that the fiction introduced by the fourth proviso to section 10(2)(vii) of the Indian Incometax Act, 1922, that a part of the insurance, salvage or compensation money received in respect of building, plant or machinery would be deemed to be profits of the previous year in which such money was received, though in fact such money represented a capital asset, was an indivisible one. It could not be enlarged by importing another fiction, viz., that if such an am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintained its accounts on the mercantile system, were first requisitioned and then compulsorily acquired by the State Government. The Land Acquisition Officer awarded a sum of Rs. 24,97,249 as compensation. On an appeal preferred by the respondent company, the arbitrator made an award dated July 29, 1955, fixing the compensation at Rs. 30,10,873 and directing the payment of interest of 5 per cent. from the date of the acquisition. The arbitrator also awarded an annual sum for the period of requisition. Thereupon, the State Government preferred an appeal to the High Court. Pending the appeal, the State Government deposited in the court Rs. 7,36,691 being the additional amount payable under the award on April 25, 1956, and the respondent was permitted to withdraw that amount on May 9, 1956, only on furnishing a security bond for refunding the amount in the event of the appeal being allowed. On receiving the amount, the respondent credited it in its suspense account on the same date. The question was whether a sum of Rs. 7,24,914 (the balance having been already taxed) could be taxed as the income of the respondent for the assessment year 1956-57 on the ground that it became payable p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that income in the nature of compensation would arise or accrue and till then there is no liability in presaenti in respect of the additional amount of compensation claimed by the owner of the land sought to be acquired. In the instant case, the Appellate Collector of Central Excise allowed the assessee's appeal against the decision of the Assistant Collector and the Superintendent of Central Excise and, as a result thereof, the assessee became entitled to claim refund of excise duty of Rs. 1,81,427. It claimed refund of the said amount by numerous applications made to the Assistant Collector. As the amount was not refunded, it ultimately filed petition being Special Civil Application No. 160 of 1974 in this court seeking direction against the Central Government and the Central Excise authorities to refund to it Rs. 1,81,427. The order of the Appellate Collector of Central Excise was, however, sought to be revised or reviewed under section 36(2) of the Excise Act and a show-cause notice was issued to the assessee on December 23, 1974, as stated above. It was during the pendency of the review or revisional proceedings that the amount of Rs. 1,81,427 was refunded to the assessee o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
