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TMI Blog1986 (2) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... . Rs. 962 . . Rs. 22,154 These amounts appeared as credit balances in the trial balance as on 31st March, 1978. 2. The ITO added this amount Rs. 22,154 to the income of the assessee, as he was of the view that these receipts should be treated as trading receipts of the assessee. He held that the assessee had adopted cash basis for sales-tax collections and payments. In support of this conclusion, he relied on a decision of the Supreme Court in the case of Chowringhee Sales Bureau P. Ltd. vs. CIT 1973 CTR (SC) 44 : (1973) 87 ITR 542 (SC) and also on the decision of the Madras High Court in the case of CIT vs. E.A.E.T. Sundararaj (1975) 99 ITR 226 (Mad). 3. When the matter went before the CIT(A), he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustified in adding it to the income of the assessee as forming part of the assessee s trading receipt. 5. On behalf of the assessee, Shri S. Sridharan, the ld. Chartered Accountant, produced the books of accounts of the assessee-firm and explained that the assessee was following the mercantile system of accounting as rightly held by the CIT(A). He further submitted that the assessee was submitting its returns to the sales-tax Department on monthly basis and that the sales-tax collections made by the assessee in each month was payable on or before the 25th of the next month along with the monthly return and that it was for this reason that the sales-tax collections were shown three different heads separately and figured only in the trial b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsequent month and pay tax on the basis of the said monthly returns. It is on this basis that the assessee had shown the sales-tax collections during the month of March, 1978 in its trial balance and paid them over to the State Government in April, 1978 along with its monthly return for the month of March 1978 which was due on or before the 25th April, 1978 under the Sales-tax Rules. The procedure followed by the assessee is perfectly in accordance with the system of accounting followed by it, namely the mercantile system of accounting and also in conformity with the Tamil Nadu Gen. ST Rules. The decision in the case of E.A.E.T. Sundararaj (1975) 99 ITR 226 (Mad) relied on by the Revenue is inapplicable to the facts of the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough on slightly different facts. In view of this well settled position, we do not find merit in the objections of the Revenue to the order of the CIT(A) in the present case, allowing the assessee s claim for deduction of the amount of Rs. 22,154 which is directly supported by the decision of the case of the Supreme Court in Kedarnath Jute Mfg. Co. Ltd. (1971) 82 ITR 363 (SC). Accordingly, we confirm the order of the CIT(A) on this point and reject ground Nos. 2 and 3. 7. The only other point in the Revenue s appeal is that the CIT(A) erred in directing the ITO to waive 75% of the interest leviable under s. 215 of the Act. According to the Revenue, the CIT(A) was not one of the authorities empowered to direct waiver of interest under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is perfectly in conformity with law. The revenue cannot dispute the power of the CIT(A) as an appellate authority to examine and adjudicate upon the claim of the assessee against levy of interest under s. 215 in an appeals challenging the assessment under s. 246(c) of the Act, as held by the Madras High Court in the case of Rajyam Pictures vs. Addl. CIT 1978 CTR (Mad) 319 : (1978) 174 ITR 847 (Mad). In fact, the CIT(A) has taken note of all the relevant facts that ought to be considered under s. 40 and also the fact that the advance tax paid by the assessee was less than the total tax payable by the assessee as per the assessment order. It is for this reason that the CIT(A) has sustained the levy of interest to the extent of 25% instea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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