1997 (8) TMI 7 - SC - Income Tax

Claim for deduction of refund of sales tax - Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the sum of Rs. 1,37,379 from the taxable trading receipt of the assessee for 1974-75 - held that Sales tax refund was a revenue receipt liable to tax u/s 41(1) - but deduction will be allowed when the same was refunded to the purchasers.

Summary

The Supreme Court held that the Tribunal was wrong in deleting a sum of Rs. 1,37,379 from the taxable trading receipt of the assessee for the assessment year 1974-75. The sales tax collected by the assessee must be treated as income, and any refund received has to be assessed as a revenue receipt. If the assessee refunds any portion to customers, a deduction can be claimed. The appeal was allowed in favor of the Revenue, with no order as to costs.