2014 (4) TMI 674 - HC - Income Tax

Waiver of Pre-deposits - Liability to deduct surcharge and turnover tax from the income u/s 37 of the Act - Computation of income tax Held that - The matter is required to be considered and decided by the competent authority, before whom the statutory appeals are pending - This being the position, the Court finds it not fit and proper to express anything on merits 40% of the outstanding liability is required to be submitted as interim stay till the disposal of appeal Partial stay granted.

Summary

Issues involved:
1. Whether 'Surcharge' and 'Turn over Tax' paid by the petitioner are deductible under Section 37 of the Income Tax Act for the computation of Income Tax.
2. Legality of assessment orders and coercive proceedings by the authorities.

Analysis:
1. The primary issue in both cases revolved around the deductibility of 'Surcharge' and 'Turn over Tax' paid by the petitioner for the purpose of Income Tax computation. The petitioner, engaged in liquor trading, argued that these payments were statutory and not to be passed on to customers, thus eligible for deduction under Section 37 of the Income Tax Act. The petitioner contended that these payments were exclusively for business purposes. However, the Department's Senior Counsel argued against the deduction, citing a Full Bench decision (A.V. Thomas & Co. Ltd. V. Commissioner of Income Tax) and the incorporation of Section 40(ii)(b) from 1.04.2014 to clarify such matters.

2. The Court refrained from expressing a decision on the merits of the case, deferring to the competent authority where statutory appeals were pending. The judgment directed the petitioner to pay 40% of the outstanding liability in both cases to benefit from interim stay during the appeal process. The petitioner was given until a specified date to make this payment, ensuring the interim stay until the finalization of the appeals. Additionally, the second respondent was instructed to expedite the appeal process by issuing speaking orders after hearing the petitioner.

In conclusion, the judgment addressed the issues of deductibility of taxes paid by the petitioner and the legality of assessment orders and coercive proceedings, providing interim relief to the petitioner while awaiting the finalization of appeals. The decision highlighted the importance of following statutory procedures and awaiting the outcome of pending appeals for a comprehensive resolution of the disputes.