TaxTMI 
TaxTMI 
2014 (11) TMI 272
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....x Act, 1961 (hereinafter referred to as 'the Act'). 2. The assessee is a listed Public Company. The assessee filed return of income for the assessment year 2004-05 on 29.10.2004 declaring total income of Rs. 42,16,81,790/-. In the computation of income for income tax purposes filed along with the return of income, the assessee has deducted an amount of Rs. 9,52.61,916/- from the book profit as the amount representing Sales Tax deferral Loan Incentive Scheme and has not offered the same as tax. As per the provisions of Section 43B of the Act, the Sales Tax collected and not paid before the due date for filing the return of income should have been offered for tax as a part of total income for the assessment year 2003-04. The assess....
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....held presuming, but not accepting that it is a loan independent of it originally being deferred Sales Tax, then also provisions of Section 41(1) would be applicable since it is a benefit arising out of an item on which expenditure has already been allowed. He confirmed the order of the Assessing Authority. Considering the alternative argument of the assessee, the Appellate Authority held that, if it is treated as Revenue in nature, the same can be taxed only in the year 2017. He held that a sum of Rs. 952.6 lakhs as reduction in loan liability is liable to tax, but not in one year and only a proportion of it. As the benefit accrues over a period upto the year 2017, only a proportion as applicable to the year concerned is to be considered. ....
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....t, benefit of non-deduction of tax was given to the assessee. When the entire liability of deferred tax in a sum of Rs. 13,78,41,600/- were discharged on payment of Rs. 4,25,79,684/-, a sum of Rs. 9,52,62,000/- partakes the character of income in the hands of the assessee and by virtue of Section 41(1) of the Act, the assessee is liable to pay tax. However the Tribunal was in error in holding it otherwise and therefore he submits a case for interference is made out. 6. Per contra, the learned counsel for the assessee submitted the entire case has to be looked into in the background of an incentive scheme introduced by the State of Maharashtra encouraging entrepreneurs to establish industries in rural areas. Viewed from that angle the sal....
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....ent was made by Sicom Limited, a Government of Maharashtra Undertaking, which was an agent for the package scheme of incentives. M/s Sicom Limited quantified the entitlement of deferral of sales tax to the assessee. As against the total amount of Rs. 20,21,64,149/- collected by the assessee towards Bombay Sales Tax and Central Sales Tax, the maximum entitlement of sales tax incentives by way of deferment was determined at Rs. 13,78,41,600/-. The validity period of the deferral was determined as 1.4.2002 to 31.3.2017, thereby the assessee could retain the amount of sales tax collected to the extent of Rs. 13,78,41,600/- up to 31.3.2017. Accordingly, a certificate of entitlement was issued by the Deputy Commissioner of Sales Tax (Incentives a....
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....et present value, the Deputy Commissioner of Sales Tax has issued a certificate on 14.4.2004 waiving the balance of the amount payable. It is thereafter the assessee did not offer Rs. 9,52,61,916/- for tax. 10. The revenue relies on Section 41 (1) of the Act to levy tax on the aforesaid amount. The said provision reads as under:- "41. Profits chargeable to tax. 1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the firstmentioned person) and subsequently during any previous year - (a) the first-mentioned person has obtained, whether in cash or in any other manne....
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....tion by way of writing off such liability in his accounts. Explanation 2 - For the purposes of this subsection, "successor in business" means - (i). where there has been an amalgamation of a company with another company, the amalgamated company; (ii). where the first-mentioned person is succeeded by any other person in that business or profession, the other person; (iii). where a firm carrying on a business or profession is succeeded by another firm, theother firm; (iv). where there has been a demerger, the resulting company." 11. As c....