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2020 (3) TMI 180 - HC - Income TaxRevision u/s 263 - Treatment to benefit of deferred sales tax payment under the Scheme announced by the State of Maharashtra and under the Scheme made a premature payment at NPV (Net Present Value) of the deferred amount of sales tax collected - Assessing Authority allowed the said benefit to the Assessee and did not invoke Section 41(1) of the Income Tax Act, treating the remaining part of the deferred sales tax as neither remission nor cessation of sales tax liability of the Assessee - HELD THAT - The controversy is no longer res integra as the Hon'ble Supreme Court, in the case of Commissioner of Income Tax, Mumbai -Vs- Balkrishna Industries Ltd ., 2017 (11) TMI 1626 - SUPREME COURT has decided that Section 41(1) of the Act does not apply in such circumstances . Following the said decision of the Hon'ble Supreme Court, a Coordinate Bench of this Court also dismissed a similar appeal filed by the Revenue in the case of Commissioner of Income Tax -Vs- M/s.Wheels India Limited 2019 (7) TMI 986 - MADRAS HIGH COURT - Decided against revenue
Issues:
Appeal under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal; Interpretation of Section 41(1) of the Income Tax Act; Benefit of deferred sales tax payment under the Scheme announced by the State of Maharashtra; Validity of the order passed by the Income Tax Commissioner under Section 263 of the Act; Application of the decision of the Hon'ble Supreme Court in the case of "Commissioner of Income Tax, Mumbai -Vs- Balkrishna Industries Ltd." Analysis: The case involved an appeal filed by the Revenue under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal, which set aside the order passed by the Income Tax Commissioner under Section 263 of the Act. The substantial question of law revolved around whether the Tribunal was correct in setting aside the Commissioner's order. The Assessee availed the benefit of deferred sales tax payment under the Maharashtra Scheme and made a premature payment at NPV. The Assessing Authority allowed this benefit, but the Commissioner deemed the Assessment Order erroneous and prejudicial to the Revenue's interest. The Tribunal, after considering both parties' submissions, relied on a decision of the ITAT, Mumbai, and found that the Assessing Officer had adopted one possible view during assessment proceedings, making the order not erroneous. The Tribunal emphasized that for revision under Section 263, the order must be both erroneous and prejudicial to Revenue's interests. The Hon'ble Supreme Court's decision in "Commissioner of Income Tax, Mumbai -Vs- Balkrishna Industries Ltd" was cited, stating that Section 41(1) does not apply in such circumstances. The High Court's detailed judgment analyzed the application of Section 41(1) and concluded that the conditions for treating the saved amount as income were not satisfied. It highlighted that the premature payment of sales tax did not amount to remission or cessation of the Assessee's liability. The Court concurred with the Tribunal's finding that the requirements of Section 41(1) were not met in the case. Following this precedent, a similar appeal by the Revenue was dismissed by a Coordinate Bench. Consequently, the present appeal was also dismissed, with the Court ruling in favor of the Assessee based on the Supreme Court's decision and the High Court's analysis. In summary, the judgment delved into the interpretation of Section 41(1) of the Income Tax Act in the context of deferred sales tax payment, relying on legal precedents and detailed analysis to uphold the Assessee's position and dismiss the Revenue's appeal.
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