1994 (5) TMI 56 - AT - Income Tax

Assessment Year Limitation For Completing Assessment Mercantile System Revenue Receipt Revised Return Sales Tax Small Scale Undertaking Time Limit For Completion

Summary

Issues Involved:
1. Time-barred assessment.
2. Jurisdiction to include Rs. 27.88 lakhs in the fresh assessment.
3. Nature of the receipt of Rs. 27.88 lakhs.
4. Claim for weighted deduction under section 35B.
5. Payment of sales tax for the assessment year 1985-86.

Detailed Analysis:

1. Time-barred Assessment:
The main issue was whether the assessment for the year 1982-83 was time-barred. The assessee filed the original return on 30th June 1982, and a revised return on 7th February 1986. The department claimed an intermediary revised return was filed on 12th February 1985, extending the assessment period to 31st March 1986. The Tribunal found that the intermediary revised return was indeed filed based on the order sheet dated 15-3-1985 and other corroborative evidence. Thus, the assessment completed on 10th February 1986 was within the extended time limit.

2. Jurisdiction to Include Rs. 27.88 Lakhs in Fresh Assessment:
The assessee argued that the addition of Rs. 27.88 lakhs in the fresh assessment was beyond the scope of the CIT(A)'s directions for de novo assessment. The Tribunal disagreed, stating that the entire assessment was set aside to be completed afresh, and the Assessing Officer was obligated to consider all material, including the audit report. The Tribunal held that the inclusion of Rs. 27.88 lakhs was within the jurisdiction of the Assessing Officer.

3. Nature of the Receipt of Rs. 27.88 Lakhs:
The assessee contended that the receipt of Rs. 27.88 lakhs was a capital receipt, compensating for losses suffered in running the transferred units. The Tribunal found no evidence to support this claim. Instead, it determined that the amount represented interest on the delayed payment of Rs. 72.71 lakhs for the transferred units. The Tribunal concluded that the receipt was a revenue receipt and taxable under section 28(ii)(d) of the Income-tax Act, 1961.

4. Claim for Weighted Deduction Under Section 35B:
The assessee's claim for weighted deduction under section 35B was partly allowed based on a previous Tribunal decision for the assessment year 1981-82. The Tribunal directed the Assessing Officer to ascertain the figures and allow the claim accordingly.

5. Payment of Sales Tax for the Assessment Year 1985-86:
The assessee claimed deductions for sales tax payments made during the assessment year 1985-86, which related to earlier years. The CIT(A) directed the Assessing Officer to verify the sales tax orders and allow the claim if the liability was incurred during the current accounting period. The Tribunal expanded these directions, stating that if provisions for sales tax in past years were disallowed, the actual payments made during 1985-86 should be allowed.

Conclusion:
- The assessment for the year 1982-83 was not time-barred.
- The inclusion of Rs. 27.88 lakhs in the fresh assessment was within the jurisdiction of the Assessing Officer.
- The receipt of Rs. 27.88 lakhs was a revenue receipt and taxable.
- The claim for weighted deduction under section 35B was partly allowed.
- The payment of sales tax for the assessment year 1985-86 should be allowed if the liability was incurred during the current period.