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TMI Blog2016 (1) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... 985/Mum/2011, ITA No. : 7560/Mum/2011, CO No. 237/ Mum/2012 - - - Dated:- 30-10-2015 - SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER For The Appellant Cross Objector by : Shri Neil Philip For The Respondent : Shri Rajesh S Athavale ORDER PER AMIT SHUKLA, JM: The aforesaid appeal and cross objection have been filed by the revenue and cross appeal by the assessee against impugned order dated 23.03.2010, passed by CIT(A)-9, Mumbai for the quantum of assessment passed u/s 143(3) for the assessment year 2007-08. We will first take-up revenue s appeal in 4985/Mum/2011 vide which following ground has been raised:- Whether on the facts, in the circumstances and in law, the Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment has raised as many as 8 grounds on the issue of remission of sales-tax liability u/s 41(1) which are by and large argumentative in nature, the said grounds however for sake of ready reference are reproduced hereunder :- (1) On the facts and in the circumstances of the case and in law, the remission of sales tax liability, though confirmed u/s.41(1) of the I. T. Act is alternatively liable to be taxed under other provisions of the I. T. Act. (2) On the facts and in the circumstances of the case and in law, the remission of sales tax liability which was worked out at a particular rate of interest for the period for which there was prepayment of liability, each liable to be taxed as interest u/s.2(28A) of the LT. Act, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nguishes this case from Suzler Ltd. that whether section 41(l) is to be invoked on the basis of difference between existing liability and the amount at which it has been settled or the difference between the existing and future liability? (5) Moreover, in regard to applicability of section 28(iv), which may be only applicable where benefit is received, in which benefits was interpreted by High Court as in kind . The question arises here when sales tax liability is converted into interest free loan, the assessee gets a right to enjoy liquidity for the period of loan and hence, this right is not a cash right and this right is in kind and is convertible into money, so considering that this benefit is covered under gains, thus business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed as deduction in the year in which conversion was made and that sales tax would be treated to have been paid for the purpose of section 43B. There are two main aspects of Circular : (a) That the circular is only for the limited purpose of section 438. In other words, the liability of sales tax does not remain sales tax liability for the limited purpose of disallowance u/s.43B but it remains sales tax liability for all other purposes of the I.T. Act. (b) Conversion of sales tax liability into loan though not a payment was treated as payment and allowed as a deduction in the assessment year relevant to the conversion. Now, in wake of the detailed decision of the jurisdictional High Court, all these arguments and grounds r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory dues. 9. The AO has disallowed these expenses on the ground that these are penal in nature. The break-up of interest disallowed are as under:- a) Interest paid for delayed payment of excise duty on supplementary invoices: ₹ 83,203/- b) Interest for excess credit taken: Rs. 1,727/- c) Interest for service tax excess credit taken: ₹ 698/- d) Interest on sales tax: ₹ 35,666/- 10. Before us, Ld. Counsel submitted that interest for delayed payment of excise duty and sales-tax on supplemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided in favour of the assessee. 14. In the result, appeal of the assessee is partly allowed. C.O. No. 237/Mum/2012 : 15. The Cross Objection as raised by the revenue wherein similar grounds have been raised, which has been raised by way of revised / modified / additional grounds as discussed in the revenue s appeal above. The grounds raised in the Cross Objection are treated as dismissed in view of the finding given therein. 16. Accordingly, C.O. raised by the revenue is dismissed. To sum-up: Revenue s appeal for AY 2007-08 CO no. 237/Mum/2012 for AY 2008-09 stands dismissed, whereas, the assessee s appeal for AY 2008-09 stands partly allowed. Order pronounced in the open court on 30th October, 2015. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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