9911796707
TMI Blog1984 (4) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... has erred in upholding the disallowance in respect of unrecovered sales tax in the sum of Rs. 5,150." As such and for the reasons stated by the Commissioner (Appeals), with which we agree, we uphold his order on these points. 3. Ground No. 1 in the appeal by the assessee and the only ground in the appeal by the revenue are inter-connected and so they are being dealt with in the manner stated hereinafter. The admitted facts in this connection are that the assessee in the year under consideration on20-11-1978received a sum of Rs. 2,32,090 as a refund from the sales tax authorities. The sales tax refund pertains to the period from31-10-1960to31-3-1963. The ITO assessing the assessee for the year under consideration, in view of the said refund, called upon it to explain as to why the above refund should not be taxed under section 41(1) of the Income-tax Act, 1961 ('the Act'). In reply, the stand taken by the assessee was that the said sum having not been charged to the profit and loss account as refund was not taxable under section 41(1) and, secondly, that the said amount was repayable by the assessee to the Director General, Supplies and Disposal (DGSD), after waiting for the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Assistant Commissioner of Sales Tax Appeals dated16-8-1977did not bring about the cessation of a trading liability. The cessation of the liability of the assessee in this behalf was not full and final, in view of the provisions of section 57 of the Bombay Sales Tax Act. Thereunder, the Commissioner had the power for suo moto revision of the order of the lower authority, including the order passed in appeal within the period of three years from the date of the communication of the order sought to be revised. That period, according to the learned counsel for the assessee, had not elapsed in the year under consideration. In support of these arguments, the learned counsel for the assessee, Mr. Harnam Shanker, relied on the decision of the Allahabad High Court in J.K. Synthetics Ltd. v. O.S. Bajpai, ITO [1976] 105 ITR 864. These arguments have been controverted by the departmental representative, who has relied on the orders of the tax authorities. 6. In the appeal filed by the revenue, the departmental representative took us through the orders of the tax authorities and urged that the Commissioner (Appeals) has erred in deleting the sum of Rs. 2,32,090 representing sales tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not. A perusal of this section, thus, shows that the following two conditions must co-exist before an amount can be deemed to be the profit and gains of business of the assessee : 1. An allowance or deduction had not made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee. 2. Subsequently during any previous year the assessee has obtained any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission of cessation thereof. Though at this stage there is no dispute before us that the assessee in the earlier years had obtained deduction in respect of the sales tax paid in its assessments for those years and that pursuant to the order of the Assistant Commissioner of Sales Tax (Appeals) the assessee has received the above amount of Rs. 2,32,090, the short point for our decision is as to whether the refund of the amount in question, as the facts stood in the year under consideration, was by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41(1), we now proceed to examine as to whether the assessee is entitled to the deduction of the said amount in computing its total income for the year under consideration, the said amount being repayable by it to DGSD. This takes us to the contract entered into by the assessee with DGSD. As already stated, a copy of the said contract is at pages 1 to 8 of the paper book filed by the assessee. One of the terms of the said contract is that the prices payable by DGSD in respect of the caterpillar, etc., to be supplied by the assessee to them were exclusive of excise duty and sales tax which would be payable extra if legally leviable and on production of documentary proof. If is also in fact that the DGSD on production of the sales tax assessment orders of the assessee in respect of the goods supplied by it to them received sales tax amount of Rs. 2,32,090 from DGSD. The said amount, in view of the order of the Assistant Commissioner of Sales Tax (Appeals) who reversed the assessment order by the STO, has been refunded on the ground that sales tax in question was not legally leviable. This order of the Assistant Commissioner of Sales Tax (Appeals), as already stated above, is subject ..... X X X X Extracts X X X X X X X X Extracts X X X X
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