1992 (5) TMI 73 - AT - Income Tax

Summary

Issues Involved:

1. Requirement of clearance from the committee for litigation between a Government Department and a public sector undertaking.
2. Applicability of Section 43B of the IT Act, 1961, to the assessee's sales tax collections.
3. Nature of receipts collected by the assessee on account of sales tax.
4. Relevance of the decision of the Punjab and Haryana High Court in the assessee's case.
5. Impact of a subsequent Tribunal decision on the current case.

Detailed Analysis:

1. Requirement of Clearance from the Committee:

The preliminary objection raised by the Departmental Representative was that the assessee needed clearance from the committee set up for litigation between a Government Department and a public sector undertaking, as per the Supreme Court decision in Oil and Natural Gas Commission vs. Collector of Central Excise. However, the Tribunal agreed with the assessee's counsel that since the appeal had been disposed of before the Supreme Court's decision, it would not be just to refuse to dispose of the miscellaneous petition without such clearance. The Tribunal concluded that the direction of the Supreme Court did not apply to applications under Section 254(2) requesting rectification of mistakes.

2. Applicability of Section 43B of the IT Act, 1961:

The issue before the Tribunal was whether the amount collected by the assessee as Central sales tax, general sales tax, and other duties would form part of the taxable receipts and whether Section 43B would be applicable. The Tribunal held that the entire receipts collected by the assessee, including sales tax, would form its taxable receipts. The CIT(A) had previously deleted part of the addition but sustained Rs. 418.35 lakhs. The Tribunal reiterated that the receipts on account of sales tax collections were of revenue nature, and deduction would be permissible in the year of payment.

3. Nature of Receipts Collected by the Assessee on Account of Sales Tax:

The Tribunal held that the nature of the receipts collected by the assessee on account of sales tax was of revenue character. The decision of the Punjab and Haryana High Court, which held that the assessee was not a dealer for purposes of sales tax, did not support the proposition that the receipts collected by the assessee were not revenue receipts. The Tribunal emphasized that the assessee's activities, including sales tax collections, were incidental to its trading activities and thus constituted revenue receipts.

4. Relevance of the Decision of the Punjab and Haryana High Court:

The assessee contended that the decision of the Punjab and Haryana High Court in its own case was not considered. The Tribunal clarified that the High Court's decision was irrelevant to the issue of the nature of the receipts. The High Court had not decided on the nature of the sales tax collections but rather on whether the assessee was a dealer under the Haryana General Sales Tax Act. The Tribunal consciously omitted reference to the High Court's decision, as it did not impact the determination of the assessable income of the Corporation.

5. Impact of a Subsequent Tribunal Decision:

The assessee referred to a subsequent decision by the 'C' Bench of the Tribunal, which held that Section 43B was inapplicable. The Tribunal noted that its decision preceded the 'C' Bench's decision and that a difference of opinion among Tribunal Benches did not constitute a mistake in the earlier order. The Tribunal also pointed out that the 'C' Bench had not considered the nature of the receipts, which was a critical aspect of the current case.

Conclusion:

The Tribunal concluded that there was no mistake in its original order and that the receipts of Rs. 418.35 lakhs on account of excess sales tax collections constituted revenue receipts. The application of the assessee was partly allowed for statistical purposes.