TMI Blog1997 (5) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Excise Department shall calculate the ad valorem excise duty during the period of three years immediately preceding the institution of the petition and refund to the petitioners, the amount paid in excess of such ad valorem calculations, as directed in a similar batch of cases earlier by the Court's order dt. 24th Jan., 1979. The calculations were directed to be made within stipulated time and the payments were to be made thereafter within specified time. The assessee preferred a claim for an aggregate sum of Rs. 14,20,414. The Central Excise Department did not accept the decision of the Gujarat High Court and appealed to the Hon'ble Supreme Court, which directed that the operation of the order dt. 24th Jan., 1979, shall be stayed in regard to the payments made after that date, but the refunds be made on the basis of the decision of the Hon'ble Gujarat High Court in regard to the payments made upto 24th Jan., 1979. The Hon'ble Supreme Court directed that the excess payments be deposited with the Court and the petitioners be allowed to draw 75 per cent of the amount against bank guarantee. Pursuant to the these directions of the Hon'ble Supreme Court, the assessee becam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1976 CTR (SC) 25 : (1975) 101 ITR 764 (SC) the Supreme Court has laid down that if the language of the Statute is clear and unambiguous, it would be wrong to discard the plain meaning of the words. Similar principle has been laid down by the Supreme Court in the judgments in CIT vs. Ajax Products Ltd. (1965) 55 ITR 741 (SC) and CIT vs. Sodra Devi (1957) 32 ITR 615 (SC). Considering the unequivocal and unambiguous wording of s. 41(1) of the IT Act, 1961, the addition of Rs. 11,04,765 made by the AO under s. 41(1) stands confirmed. Considering the totality of the facts and circumstances of the case, the addition of Rs. 11,04,765 stands confirmed." 5. Shri R.N. Vepari, the learned counsel for the assessee submitted that the CIT(A) erred in not appreciating the fact that the assessee had, at no point of time, claimed any deduction for payment of excise duty, and consequently, the question of invoking the provisions of s. 41(1) would never arise. The learned counsel for the assessee further submitted that the CIT(A) erred in not appreciating the fact that the interim order of the Hon'ble High Court of Gujarat, directing issue of refund, was the subject-matter of appeal before the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Bureau (P) Ltd. vs. CIT and Sinclair Murray Co. (P) Ltd. vs. CIT, and held that the sales-tax constituted a trading receipt in the hands of the seller who collects it from the customers and pays to the Government. However, the trader shall be entitled to claim deduction in respect of such realisation or any part thereof as and when he pays it to the Govt. or to the purchaser. The principles discerned in relation to sales-tax collections have been identical application also in case of other imposts such as the excise duty, etc. in view of the case laws CIT vs. Partabmull Rameshwar (1977) 107 ITR 526 (Cal) and CIT vs. Bijli Cotton Mills (P) Ltd. (1970) 76 ITR 625 (All). In the case of Mc Dowell Co. Ltd. vs. CTO (1985) 47 CTR (SC) 126 : (1985) 154 ITR 148 (SC) the Hon'ble Supreme Court has held that excise duty collections made by the assessee are part of trading receipts. Excise Duty in Mc Dowell Co. Ltd.'s was directly paid by the customers. The question for consideration in that case was whether such payment of excise duty directly made by the customers can be regarded as a part of turnover in the hands of the seller for the purpose of levy of sales-tax. The Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to refund to them the aggregate amount paid under this head which the authorities did, by way of one lump sum repayment totalling Rs. 9,11,618 and the refund in question was made during the asst. yr. 1983-84. The assessee contended that this amount related to a separate account altogether, that they had at no point of time earlier claimed any deductions or allowances in respect of this amount, and hence, the amount was not assessable in their hands. The assessing authority accepted this position whereas, the CIT took the view that the provisions of s. 41(1) of the Act would clearly apply and that, consequently, the amount was liable to be included in their taxable income. This was confirmed by the Tribunal. On a reference, the Hon'ble Karnataka High Court held that the Tribunal was justified in holding that the provisions of s. 41(1) could be invoked to tax the refunds received during the accounting year relevant to the asst. yr. 1983-84 even when the part of excise duty was not claimed as expenditure in the P L a/c of earlier years and the applicant had kept a separate account in respect of collection and payment of excise duty. Interpreting s. 41(1), the Hon'ble Karnataka High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finalised on the basis of a situation whereby the amount so depleted or deducted is accepted, it would still come within the ambit and scope of the section. In our considered view, this is the only correct way that s. 41(1) can be interpreted if the legislative intent is required to be enforced. We have also taken note of the fact that such a view has by and large found favour by various Courts including the two earlier Division Bench decisions of this Court." Applying the above interpretation to the facts of the case before us, we hold that the excise duty refund of Rs. 11,04,765 was taxable under s. 41(1) during the year under appeal. We are also fortified by the decision of the Tribunal in the case of The Visnagar Taluks Audyogik Sahakari Mandli Ltd. vs. Dy. CIT (ITA Nos. 2805 and 2804/Ahd/1995) to which one of us (A.M.) was a party. 7.2. Now we would like to discuss the two judgments relied upon by the learned counsel for the assessee. In Union of India Anr. vs. J.K. Synthetics Ltd. the Hon'ble Supreme Court confirmed the decision of the Allahabad High Court in the case of J.K. Synthetics Ltd. vs. ITO 1975 CTR (All) 256 : (1976) 105 ITR 864 (All). In that case the Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund of the said amount by numerous applications made to the Asstt. Collector but the amount was not refunded. It ultimately filed a petition in the Court seeking a 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 and reviewed under s. 36(2) of the Excise Act and a show-cause notice was issued to the assessee in December, 1974. It was during the pendency of the review or revisional proceedings that the amount of Rs. 1,81,427 was refunded to the assessee on 8th Aug., 1975. The review or revisional proceedings under s. 36(2) of the Excise Act were dropped on 30th April, 1976. The ITO, in the course of assessment for the asst. yr. 1974-75, invoked the provisions of s. 41(1) of the IT Act and included the aforesaid amount of Rs. 1,81,427 in the total income of the assessee though it had not been actually refunded to the assessee in the asst. yr. 1974-75. Under these circumstances the Hon'ble High Court held that "the assessee's claim for refund of the excise duty was in jeopardy". It is evident from the facts of the case before us that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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