TaxTMI 
TaxTMI 
1997 (3) TMI 77
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....Appellate Tribunal was justified in allowing deduction of Rs. 17,78,313 ? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is justified in allowing the assessee's claim on account of liability to sales tax/purchase tax amounting to Rs. 17,78,313 as the liability had not crystallised and the same is contingent ? " It is question No. 2 which is relevant for our decision. The assessee is a company registered under the Companies Act. It is in fact a Government company as defined under section 617 of the Companies Act. It is a subsidiary of Minerals and Metals Trading Corporation of India Ltd. (for short "the MMTC"), the holding company, which is also a Government company. The assessee for the a....
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....ome-tax (Appeals) and the orders of the Tribunal in appeal and on an application filed under section 256(1) of the Act, it says nothing. The questions of law as framed, however, do indicate as to what was the claim of the assessee and this claim was on account of liability of sales tax/purchase tax which was disallowed by the Assessing Officer on the ground that the liability had not crystallised and that the same was contingent. Mr. Rastogi, learned counsel appearing for the Revenue, submitted that the court cannot go behind the statement of facts and in support of his contention he has referred to the decision of the Supreme Court in the case of CIT v. Panipat Woollen and General Mills Co. Ltd. [1976] 103 ITR 66 where the court says tha....
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.... for deduction of that amount on the grounds (i) that the assessee had contested the sales tax liability in appeals, and (ii) that it had made no provision in its books with regard to the payment of that amount. The appeal of the assessee to the appellate authority under the sales tax law contesting its liability to pay sales tax ultimately failed. The court held that the moment a dealer made either purchases or sales which were subject to sales tax, the obligation to pay the tax arose. It was held further that the assessee was entitled to deduction of the sum claimed being the amount of sales tax which it was liable under the law to pay during the relevant accounting year. It was held that that liability did not cease to be a liability bec....