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of <h1>Court rules in favor of appellant, transactions not taxable under Sales Tax Act</h1> The Court allowed the appeal, setting aside the Board of Revenue's order and ruling in favor of the appellant. The Court held that the transaction ... - Issues:1. Deduction claimed for inter-State purchases of cotton.2. Assessment of turnover related to the loan transaction of Egyptian cotton.Analysis:1. The assessee claimed a deduction of Rs. 1,06,239.96 for inter-State purchases of cotton in the assessment year 1968-69. The assessing officer initially rejected the claim due to lack of proof. However, the Appellate Assistant Commissioner accepted the contention and deleted the turnover. Subsequently, the assessing officer revised the assessment under section 16, including a sum of Rs. 2,29,999.23 as taxable turnover. The Appellate Assistant Commissioner set aside the revised assessment, considering it as an inter-State purchase not liable to tax in Tamil Nadu.2. The turnover of Rs. 2,29,999.23 was related to the loan transaction of Egyptian cotton. The assessing officer considered the transaction as a sale, leading to assessable turnover under the Tamil Nadu General Sales Tax Act. The Appellate Assistant Commissioner, while agreeing that it was not a loan transaction, held it was an inter-State purchase not taxable in Tamil Nadu. The Board of Revenue, in suo motu revision, determined that the sale occurred when the deposit amount was forfeited by the Bombay mills within the State, making it a local sale subject to tax. The Board rejected the contention that the proceedings were barred by limitation and upheld the assessing officer's order. However, the Court held that the transaction was not a sale but a make-belief arrangement, concluding that it was not liable to tax under the Tamil Nadu General Sales Tax Act.In conclusion, the Court allowed the appeal, setting aside the order of the Board of Revenue and ruling in favor of the appellant, holding that the transaction was not taxable under the Act.
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