2021 (4) TMI 793 - HC - Income Tax

Disallowance of entry tax on raw materials and the inputs that are brought into assessee factory at Bangalore for manufacture of Tractors - Whether the finding of the Tribunal is proper especially when the assessee has debited an amount towards entry fees against the miscellaneous charges in the Profit and Loss account? - HELD THAT - Revenue fairly submitted that the questions of law that were framed in the above appeal at the time of admission were already decided against the Revenue by the Hon'ble Division Bench of this Court in Commissioner of Income Tax, Chennai Vs. TVS Motors Ltd 2014 (2) TMI 522 - MADRAS HIGH COURT - Thus the questions of law are decided against the Revenue.

Summary

Issues:
Challenging order passed by Income Tax Appellate Tribunal regarding assessment year 2002-03 disallowing entry tax in Profit and Loss account.

Analysis:
The appellant, Revenue, challenged the Income Tax Appellate Tribunal's order regarding the assessment year 2002-03, where the assessee had debited an amount towards Entry Fee under Miscellaneous Charges in the Profit and Loss account. The Assessing Officer disallowed this claim, stating that entry tax was not adjustable from sales tax and should not be part of expenditure in the Profit and Loss account. The Commissioner of Income Tax (Appeals) allowed the appeal, following a decision in a similar case. The Tribunal also confirmed this decision, leading to the Revenue's appeal.

The substantial questions of law admitted in this case were whether the Tribunal was correct in upholding the order of CIT(A) deleting the disallowance of entry tax on raw materials and inputs brought into the factory for manufacturing tractors, and whether the Tribunal's finding was proper when the assessee debited an amount towards entry fees in the Profit and Loss account. The Hon'ble Division Bench of the Madras High Court had previously decided similar issues in the case of Commissioner of Income Tax, Chennai Vs. TVS Motors Ltd., where it was held that the entry tax paid by the assessee was allowable as a deduction, rejecting the Revenue's plea on double deduction.

During the hearing, the senior standing counsel for the Revenue acknowledged that the questions of law were already decided against the Revenue in the TVS Motors Ltd. case. Following the precedent set by the Division Bench, the Court decided the questions of law against the Revenue and dismissed the Tax Case Appeal, citing the TVS Motors Ltd. judgment. The learned counsel for the respondent agreed with this decision, and the appeal was consequently dismissed with no costs.