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TMI Blog2015 (6) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... the Sales Tax Act for providing deferment of the Sales Tax liability and to treat the said sales tax collected as loan for use of the assessee Company, CIT(A) is perfectly justified in deleting the addition on account of deferment of sales tax. - Decided against revenue. - MA No. 36/Ahd/2010, ITA No. 1500/Ahd/2009 - - - Dated:- 23-1-2015 - Mukul Kr. Shrawat, JM And Anil Chaturvedi, AM,JJ. For the Appellant : Shri M K Singh, Sr DR For the Respondent : Shri S N Soparkar, AR ORDER Per: Mukul Kr Shrawat, Judicial Member : This Misc. Application has been filed by the Revenue Department on 2nd of February, 2010 arising from the order of the Tribunal as mentioned in the above nomenclature dated 7.8.2009. 2. From the side of the Applicant, learned Sr.D.R., Mr. M.K. Singh appeared and placed reliance on this Misc. Application, relevant paragraphs are reproduced below: 2. The disallowance on account of deferment of sales-tax of ₹ 42,21,000/- has been made in the assessment as the assessee company has not produced any evidence to show that the above liability had been converted into loan. The deduction in respect of the amount of sales-tax liability, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted an error. This Misc. Application has been filed to rectify that error. 4. From the side of the respondent-assessee, learned AR, Mr. S.N. Soparkar appeared and pleaded that the Respected Tribunal has considered all those aspects and thereupon passed a detailed order. He has placed reliance on certain portions of the order, for ready reference reproduced below: 2. Apropos Ground No.1, the facts relevant are that it was noticed by the Assessing Officer that out of sales-tax deferment of ₹ 629.26 lakhs as shown as outstanding in balance sheet, liability to the extent of ₹ 42.21 lakhs pertained to previous year relevant to the assessment year under consideration. The Assessing Officer asked the assessee to produce certificate in Form D for ensuring that sales-tax deferment was converted into loan by respective Government authority. In response, the assessee vide its letter dt.26.3.2007stated that the amount of sales-tax deferment was treated as loan by the Commercial Tax Department. The assessee produced a copy of letter dt.23.3.2007 from the Department of Commercial Taxes, Belgauim. The assessee also referred to Circular No.496 dt.25.9.2987 and also relied on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s.43B of the Act. In paragraph 4 of the Board Circular No.496 dt.25.9.1987, the Board have decided that where amendments are made in the Sales Tax Act on these lines, the statutory liability shall be treated to have been discharged for the purposes of Section 43B of the Act. Reliance was also placed on the decision of Madhya Pradesh High Court in case of ACIT v. Perfect Pumps (P) Ltd [(2007) 212 CTR (MP) 145. Considering the above submissions and evidence produced in support, the learned C1T(A) deleted the disallowance by observing in his order vide paragraph 3.2 as under : 3.2. The submissions made by the A.Rs have been verified and the documents furnished are also examined. It is seen that the appellant has been given the Sales Tax liability deferment benefit by the Karnataka Government; Therefore I find that the appellant's claim is in its order. Form No.D as in Gujarat Government is not applicable to unit in Karnataka Government. Hence, the A.O. is directed to delete the disallowance made by him. Therefore, this ground of appeal is allowed. 4. Heard both parties and perused the material on record. To resolve the controversy, we may first refer to Circle No.49 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts make an amendment in the Sales Tax Act to the effect the sales tax deferred under the scheme shall be treated as actually paid, such a deeming provision will meet the requirements of section 43B. This circular has been explained by the Tribunal in the case of Morvi Horologial Industries v. ITO (36 LTD 115)(Ahd), by M.P.High Court in CIT v. K.N.Oil Industries (226 ITR 547)(MP) and also by Hon ble Supreme Court in the case of CIT v. Gujarat Polyerete Pvt. Ltd. (246 ITR 463)(SC). Reading of these decisions suggests that provisions of Circular No.496 would apply only if a State Government had amended its Sales Tax Act to provide that the sales tax that the deferred under an incentive scheme framed by it would be treated as actually paid, so as to meet the requirements of section 43B of the Income-tax Act. 6. The facts undisputed are that the assessee is having manufacturing unit in Karnataka. Karanataka Government had amended the Sales Tax Act for providing deferment of the Sales Tax liability and to treat the said sales tax collected as loan for use of the assessee Company. In this connection, we may refer to Section 19C of the Karanataka Sales Tax Act, 1957, which is reproduce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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