AI Drafter 
TaxTMI 
TaxTMI 
2018 (5) TMI 1019
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....deferment scheme sanctioned by the Government of West Bengal, meaning thereby the sales tax collected by the assessee need not be remitted to the sales tax authorities for a certain period of time. Accordingly the assessee did not make any remittance of this sales tax collection of Rs. 39,29,928/- to the sales tax authorities. The assessee produced copy of the eligibility certificate issued in Form No.XIX by Assistant Commissioner , Commercial Taxes, West Bengal vide Certificate No.6295 dated 25.06.1993 wherein the assessee dealer was given eligibility for deferment of payment of sales tax for a period of 7 years commencing from 21.05.1992. The ld. AO applied the provision of section 43B of the Act and held that since the assessee had not made the remittance of sales tax collected and the assessee had not produced any evidence to show that the unpaid sales tax which has been converted into loan by the state Government, the requirement of CBDT Circular No.496 dated 25.09.1987 was not fulfilled by the assessee and accordingly proceeded to make disallowance u/s 43B of the Act. 4. The ld. CIT(A) noted in his order that Commercial Taxes Department, West Bengal had granted deferment o....
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....anufacture of such notified commodity, or (b) In the case of. an existing industrial unit in 1 [West Bengal.] which has been expanded on approval of the State Government, from the prescribed date on which such tax becomes payable in a year during the period referred to in sub-section (2) under this Act in respect of notified commodity 2[, other than such notified commodity as may be prescribed.] manufactured in the expanded portion of such unit on utilisation of the added capacity of the plant and machinery installed therein or goods purchased for use directly in the manufacture of such notified commodity, for such period, not exceeding 3[ nine years,] as may be prescribed, and different periods may be prescribed for different such new7, set up or existing industrial units having regard to the location of such units [in different areas as may be prescribed :] 5[Provided that deferment of payment of tax payable by a dealer in respect of sales of notified commodities manufactured by him in any of the prescribed areas may be restricted to sales of such class or classes of notified commodities as may be prescribed : Provided further that the period p....
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....duction from their income. 3. Representations have been received from various State Governments and others that cases of deferred sales tax payments should be excluded from the purview of section 43B as the operation of this provision has the effect of diluting the incentive offered by the deferral schemes. 4. The matter has been examined in consultation with the Ministry of Law and the various State Governments. The Ministry of Law has opined that if the State Governments make an amendment in the Sales Tax Act to the effect the sales tax deferred under the scheme shall be treated as actually paid, such a deeming provision will meet the requirements of section 43B. 5. The Government of Maharashtra have by the Bombay Sales Tax (Amendment) Act, 1987, made the amendment accordingly. The Board have decided that where amendments are made in the sales tax laws on these lines, the statutory liability shall be treated to have been discharged for the purposes of section 43B. Circular: No. 496 [F. No. 20J/34/86-/T(A-Il)] dated 25-9-/987 5.1. We also find that CBDT had also come out with Circular no.674 dated 29.12.1993 on the impugned issue which reads ....
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..... West Bengal Sales Tax Act, the assessee is deemed to have complied with the provisions of section 43B of the Act and accordingly entitled for deduction of the same. Hence we have no hesitation to consider grant of deduction of Rs. 39,29,928/- u/s 43B of the Act on account of unpaid sales tax. Accordingly ground no.1 raised by the assessee is allowed. 6. he next ground to be decided is as to whether the ld. CIT(A) was justified in confirming the disallowance of Rs. 1,51,26,826/- u/s 43B of the Act on account of unpaid interest to IDBI in the facts and circumstances of the case. 7. The brief facts of this issue is that the assessee explained that the company had suffered huge loss and became a sick company under Sick industrial Companies (Special Provisions) Act, 1985 and stood under the purview of Board of Industrial and Financial Reconstruction (BIFR). The company in order to revive its business, borrowed funds on interest and due to adverse business situation, it was unable to pay interest on such loans immediately and accordingly approached the lending institution (IDBI) with a proposal for rescheduling the loan and for converting the unpaid interest into a loan which wil....