TMI Blog2008 (5) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Income Tax Appellate Tribunal decided the appeals relating to the year 1993-94 and 1994-95 by a common order dt. 12.10.2004, out of which the two appeals no. 49 and 30 arise, while appeal relating to assessment year 1996-97 was decided vide order dt. 18.10.2004 by simply following its earlier judgment dt. 12.10.2004. 3. Bereft of unnecessary details the facts are, that during these relevant years, after assessment having been made under Section 143(1)(a), the cases were taken up for scrutiny, and after completing requisite formalities revised assessment orders were passed. Since in the present matters the controversy relates only to the admissibility of deduction under Section 43B, we think it appropriate to confine on that aspect of the matter only. 4. In the revised assessment order, the learned Assessing Officer found that the assessee had collected sales tax during the relevant year, and did not deposit it in the State Treasury, in view of the fact, that the assessee was issued Eligibility Certificate under the Rajasthan Sales-tax Deferment Scheme, 1987, published in the gazette on 29.9.1987, which was framed in exercise of the powers conferred under Section 7(2B) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act of 1954, while circular no. 674 (see [1994] 205 ITR (st.) 119) will not be applicable, because in the present case sales tax deferred has not been converted into loan either by RIICO/RFC or Industries Department during the year concerned. Thus addition was upheld. This order was passed by the learned Commissioner of Income Tax (Appeals) on 18.10.1996. 6. However, the appeal relating to assessment year 1996-97 in this regard was allowed by the learned Commissioner (Appeals) vide order dt. 14.9.1999, inter alia holding, that it is not in dispute, that the State Government has issued notification, to the effect, that the sales tax collected by the appellant to the equal of the loan liability raised by RIICO/RFC or Industries Department will be treated as loan, that too interest free, and the same should be paid in instalment in subsequent years, as desired by the Sales Tax Department. Thus, the observation of the Assessing Officer about no conversion of sales tax into loan was not accepted, in view of the certificate issued by the Industries Department. Thus, the CBDT circular no. 674 (see [1994] 205 ITR (st.) 119) was found applicable, and to the extent of this conversio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under incentive scheme would be treated as actually paid, it would not satisfy the requirement of Section 43B about the amount actually having been paid. Then, reliance was placed by the learned counsel for the Revenue on the judgment of this Court also, in the case of Commissioner of Income Tax Vs. Devendra Udhyog, reported in [2003] 264 ITR-701. It may be observed here that the learned Tribunal while deciding the appeals in the assessment year 1993-94 and 1994-95, had also relied upon its earlier judgment in Devendra Udhyog's case[2003] 264 ITR-701, which according to the learned counsel for the Revenue, has been set aside by this Court in the said judgment reported in Commissioner of Income Tax Vs. Devendra Udhyog reported in [2003] 264 ITR-701. 12. To distinguish these cases, learned counsel for the assessee invited our attention to the provisions of Section 7(2B) of the Act of 1954, which was inserted by amendment w.e.f. 10.9.1987, and provides, that notwithstanding anything contained in sub-section (2) or sub-section (2A), where the State Government is of the opinion, that it is necessary or expedient in the public interest so to do, it may, by notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Act, this sum was "payable" by the assessee by way of tax, and therefore, the requirement of the proviso, requiring actual payment, to entitle the assessee to claim deduction, was not even attracted. 13. We have considered the submissions, and have gone through the orders of the learned authorities below, including those of the learned Tribunal, in all the three matters, and have gone through the various judgments cited at Bar. Before proceeding further we may gainfully quote the provisions of Section 7(2B) of the Act of 1954, which is introduced by amendment w.e.f.10.9.1987, so also the provisions of proviso to para-4 of the Scheme, which was inserted vide notification dt. 27.3.1995, (without specifying as to, with effect from what date it has been introduced). These read as under:- "(2B) Notwithstanding anything contained in subsection (2) or sub-section (2A), where the State Government is of the opinion that it is necessary or expedient in the public interest so to do, it may, by notification in the Official Gazette, defer the payment of tax payable by any class of dealers for any period on such conditions and under such circumstances as may be specified in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Boards Circular No. 496 (F.No.201/34/86-ITA.II),dated 25-9-1987, (see [1988] 169 ITR (st.) 53) and it was decided that, where the State Governments make an amendment in the Sales-tax Act to the effect that the sales tax deferred under the scheme shall be treated as actually paid, the statutory liability shall be treated as discharged for the purposes of section 43B. 2. It has since been brought to the notice of the Board that some State Governments, instead of amending the Sales-tax Act, have issued Government Orders notifying schemes under which sales tax is deemed to have been actually collected and disbursed as loans. Such Government Orders also provide that entries shall be made in the Government accounts giving effect to deemed collections by crediting the appropriate receipt-heads relating to sales-tax collections and debiting the heads relating to disbursal of loans. It has, therefore, been represented that, as such conversion of the sales tax liability into loans have similar statutory effect as can be achieved through amendments of the Sales-tax Act, the amounts covered under the scheme should be allowed as deduction for the previous year in which the conversion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause of the Revenue. 17. So far as Devendra Udhyog's case [2003] 264 ITR-701 is concerned, as noticed above, amendment in the Act were projected to have admittedly not been made, and as appears from the recapitulation of the submissions made before this Court by the learned counsel for the Revenue, that attention of this Court was invited to only circular no. 496, and it was contended, that admittedly no amendment has been made, and that, in the Circular no. 674, (see [1994] 205 ITR (st.) 119) if the sales tax collected, has neither been paid actually, nor that liability has been converted into loan, that amount is hit by the provisions of Section 43B, and in that case, the amount of sales tax had not been converted into loan, as required by circular no. 674. (see [1994] 205 ITR (st.) 119) This Court after noticing the submissions found, that neither there is an amendment in the Sales Tax Act, to give effect to the provisions of the scheme, nor sales tax collected has been converted into loan, as required by circular no. 674. (see [1994] 205 ITR (st.) 119).With these conclusions, the judgment of the learned Tribunal was set aside. As against this, in the cases in hand, as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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