TaxTMI 
TaxTMI 
2003 (7) TMI 304
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....facts of the case giving rise to this appeal are that a return of income filed by the assessee for asst. yr. 1997-98 declaring a net loss of Rs. 29,65,817 was initially processed by the AO under s. 143(1)(a) on 9th Feb., 1998, making a prima facie adjustments to the tune of Rs. 25,752. Subsequently it was noticed by the AO that the assessee-company had not paid outstanding sales-tax amount of Rs. 44,99,417 shown under the head "deferred payment credit" in the balance sheet before the due date as required by first proviso to s. 43B whereas as per Note No. 8 in Sch. 'U' annexed to the balance sheet filed with the return of income, the initial exemption granted to the assessee-company from sales-tax liability had already expired on 17th Oct., ....
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....o income of the assessee-company under s. 43B. 3. After considering the submission made on behalf of the assessee-company, the AO was of the opinion that the assessee-company, being not a relief undertaking as on 31st March, 1997, i.e., at the end of the year under consideration, it was not eligible for deferment of taxes or other benefits available to it as a relief undertaking as on that date. He accordingly held that the unpaid sales-tax liability of Rs. 44,99,417, therefore, ought to have been disallowed by way of prima facie adjustment since the assessee had failed to pay the said amount before the due date of filing of return and there being mistake in not making such adjustment under s. 143(1)(a) which was apparent from record, he....
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....f the balance also, it was very clearly explained that the extension from the State Government was awaited. There is absolutely no dispute with regard to the fact that the assessee opted for the Sales-tax Deferment Scheme and in all the preceding years no such prima facie adjustment burdening the assessee with levy of additional tax, was made. Subsequent events, such as the return for the subsequent assessment year, in my considered view, could not constitute basis for carrying out the rectification in the year under consideration, as done by the AO in the instant case. The settled position of law is that the consequences of a rectification under s. 154 do not result in the payment of additional income-tax whereas an adjustment under s. 143....
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.... now provided a sum of Rs. 44,99,417.90 (previous year Rs. 56,15,915.85) towards sales-tax liability for the current year which has been kept under the head "deferred payment current year which has been kept under the head "deferred payment credit"." 5. From the perusal of the aforesaid note, it is evident that although it was mentioned in the said note that the initial exemption to the assessee-company, from sales-tax liability had already expired on 17th Oct., 1993, nothing was mentioned in the said note about the further extension of the said exemption. Moreover, it was specifically mentioned in the said note that the assessee-company is expecting a 'pioneer status' under the sales-tax exemption scheme and again there was nothing in t....