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TMI Blog2009 (10) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to the provisions of Section 43B of the Income Tax Act, 1961, whereas the said circulars cover the sales tax only and do not have mention of luxury tax?" 2. Briefly stated the facts of the case are that to give an impetus to the industry in the State of Himachal Pradesh especially the Hotel Industry, the State has permitted the hotels to make deferred payment of luxury tax/sales tax for a period of seven years to new hotels set up in the prescribed areas. According to the assessee-M/s.Eastbourne Hotels Pvt. Ltd. Shimla, it fulfils all the conditions relatable to the deferred payment to the luxury tax/sales tax. It, therefore prayed that in terms of the Circular Nos.496 and 674 issued by the Central Board of Direct Taxes (CBDT), the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 43B and it found that a large number of States had introduced sales tax deferral schemes as a part of the incentives offered to entrepreneurs setting up industries in backward areas. 6. Under these schemes, the eligible units are permitted to collect sales tax and retain such tax for a prescribed period. In the present case, the prescribed period is seven years whereafter the tax is payable either in lump sum or in instalments. Various State Governments made representations that the provisions of Section 43B should be read in such a manner so as to give effect to the incentives offered under the deferral schemes and not be an obstruction to the said schemes. Thereafter, the matter was examined by the CBDT in consultation with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the Government, the deduction shall be permissible in the previous year in which such conversion is permitted. The Circular in our opinion totally covers the dispute. It is more in the nature of a clarification of Section 43B. The Revenue is bound by the circulars issued by the CBDT. 9. It may be mentioned that in view of the second circular, the Gujarat High Court in Commissioner of Income Tax v. Bhagwati Autocast Ltd. 2003 (261) ITR 481 and the Punjab and Haryana High Court in Commissioner of Income Tax v. Mahaluxmi Brick Manufacturing, Moulding and Fabricating Industries Pvt. Ltd. 2005 (273) 190 held that the assessee is allowed to claim deduction of the sales tax in the year in which it was payable notwithstanding the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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