TaxTMI 
TaxTMI 
1961 (3) TMI 5
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.... mercantile and cash. Purchases and sales of goods on credit were duly entered in the books of account. The sales tax actually recovered by the tax authorities was debited when paid and amounts if any refunded were credited when received. The assessees had adopted the system which was permitted by the Act of paying tax calculated on the turnover of the previous year of account. Under this system, tax was provisionally assessed by the Sales Tax officer on the basis of the turnover of the previous year, and thereafter the liability was adjusted at the end of the year of account in the light of the actual turnover of that year, and of rebate allowed in respect of groundnuts pressed into oil. As a result of the final adjustment made by the sale....
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....s rebates was permitted by the Income-tax Officer not only in the assessment year 1946-47 but also in the earlier years. The Excess Profits Tax Officer had also adopted for the chargeable accounting period prior to October 18, 1944, the same method of computation, but for the chargeable accounting period October 18, 1944, to November 4, 1945, the Excess Profits Tax Officer allowed out of the amount of Rs. 47,276 debited to sales tax only Rs. 17,055 as properly attributable to that period in computing the excess profits tax liability. According to the Excess Profits Tax Officer, the excess amount paid under the provisional assessment, i.e., Rs. 30,221, could not be taken into account, because under rule 12 of Schedule I of the Excess Profits....
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....the part of the assessees. It is not found that excess tax on inflated returns was paid in anticipation of the repeal of the Excess Profits Tax Act. The assessees for reasons of convenience adopted, as they were entitled under the Madras General Sales Tax Act, a system of payment of tax on provisional assessment based on the turnover of the previous year subject to final adjustment to be made at the end of the year. The assessees could opt for the system of paying sales tax on provisional assessment, but the liability to pay tax imposed was on that account not voluntarily incurred. This system produced no direct benefit to the business and adjudged in retrospect, it undoubtedly reduced the taxable income ; but if otherwise the payment was r....
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....isfaction of liability which arises by virtue of the assessment made by the Sales Tax Officer cannot be called unreasonable. Payment of sales tax as assessed being obligatory and necessary for the purpose of carrying on the business, it must in our opinion be deemed to satisfy the requirements of clause 12 of Schedule I of the Excess Profits Tax Act. The Excess Profits Tax Officer was, in our opinion, in error in thinking that the tax paid was in excess of the requirements of the business. We are also of the view that the Tribunal was in error in holding that by seeking to deduct only the tax properly attributable to the actual turnover during the chargeable accounting period, the Excess Profits Tax Officer was not seeking to disturb the ....