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TMI Blog1990 (2) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... The method of accounting is mercantile and the year ended on30-6-1981. The first ground relates to the claim of sales-tax liability amounting to Rs. 13,68,680. The basic facts need to be narrated in order to clarify the controversy. The assessee company is running two Solvent Extraction Units for the extraction of Rice Bran Oil. This rice bran oil is being sold in the course of inter-State trade and commerce to various parties situated outside theterritoryofPunjab. Under the Central Sales-tax Act, edible oil is liable to sales-tax @ 1% against 'C' form if sold during the course of inter-State trade and commerce and @ 4% if it is a non-edible oil. The assessee despatched rice bran oil to its buyers atBombay,Calcutta,DelhiandGhaziabad. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year in question on the basis that the Sales-tax Department had been charging Central Sales-tax @ 4% on Rice Bran Oil in other cases like M/s. Chhattar Extractions Pvt. Ltd., M/s. Veekay Oils Pvt. Ltd., M/s. Bhatinda Chemicals and Vanaspati (P.) Ltd., etc. The further case of the assessee was that the estimate of the assessee stood established by the subsequent assessment made by the Sales-tax Department wherein it had charged Central Sales-tax @ 4% on these oils. In this connection it had been pointed out that subsequent to the filing of the Income-tax return for the assessment year in question a show-cause notice fixing 22-8-1985 for hearing was received from the Sales-tax Department as to why Rice Bran Oil be not charged @ 4% instead o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 133 ITR 515 (Ker.) (FB); (6) Haji Lal Mohd. Biri Works v. CIT [1982] 134 ITR 718 (All.); (7) CIT v. K. Kesava Reddiar [1989] 178 ITR 457 (Ker.). On the other hand, Shri Rajiv Bakshi, the learned Departmental Representative strongly supported the orders of the Income-tax Authorities. 5. The rival submissions as also the decisions referred to above have been very carefully considered. On behalf of both the sides implicit reliance has been placed on the well-known decision of the Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd. That decision is to the effect that the moment a dealer makes either purchases or sales which are subject to sales tax, the obligation to pay the tax arises, although that liability be not enforceable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng authority Ward No. 9, Ludhiana-I could constitute as an additional demand for the assessment year 1982-83 so as to make it claimable in the assessment year in which the said assessment was made. Once that position is realised, it would be clear that the only assessment year in which the assessee could justifiably claim the differential Sales-tax liability would be the assessment year 1982-83 in question and not any subsequent year. The IAC (Assessment) was, therefore, not right in dismissing the assessee's claim on the ground that no demand had been raised by the Sales-tax authorities regarding the differential Sales-tax liability amounting to Rs. 13,68,680 as aforesaid. On the same basis, the learned CIT (Appeals) was also not justified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntatives on both the sides on this point. The assessee is a limited company. It has six Directors out of whom three are Advocates and are not connected with the day-to-day running of the company. The other three Directors managing the company are S/Shri A.K. Oswal, R.K. Singhania and N. Satyanarayana. It had been stated on behalf of the assessee before the learned CIT (Appeals) that these three Directors did not draw any emoluments from the assessee company. Further the Director Shri A.K. Oswal had been provided with a car by Oswal Woollen Mills. It is not the case of the department that the personal user of the car is authorised by the company as one of the terms of their employment. Therefore, in our view no disallowance could be made in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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