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TMI Blog2002 (5) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income-tax (Appeals) to the effect of the Central sales tax payable amounting to Rs. 1,59,807 as on December 31,1977, though being a revenue receipt was also simultaneously allowable as a deduction for the assessment year 1978-79 itself because of the mercantile system of accountancy being followed by the assessee? 2. Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in holding that the term 'actually pays' as used by their Lordships of the hon'ble Supreme Court in the case of Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542 meant as 'payable' in the case of the assessee following the mercantile system of accountancy?" For the purpose of deciding whether the questions of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations: "I have given careful consideration to the entire matter and I have also gone through the combined order for all these years passed by the Income-tax Appellate Tribunal, Delhi Bench B. The additions made on account of sales tax have been deleted for all these years and the main discussion had been recorded in para. 9 and para. 13. The relevant extract is reproduced below: 'Any amount collected by an assessee towards sales tax does not belong to it. It belongs to the Government and has to be paid under the relevant sales tax legislation. Therefore, as soon as a trader collects sales tax from a customer, a corresponding liability arises for paying that amount to the Government. It was for this reason that in Kedarnath Jute Manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence between the collection and payment of tax. For the reasons discussed above, this was, in our view, not permissible and we, therefore, delete the additions made by the Assessing Officer in the reassessments on account of the sales tax . . . .' Respectfully following the view taken by the hon'ble Income-tax Appellate Tribunal, it is held that there was no justification for making disallowance of sales tax to the tune of Rs. 1,59,807. The reliance placed by the Assessing Officer on the decision of the Punjab and Haryana High Court in the case of Sirsa Industries v. CIT [1984] 147 ITR 238 (single judge) has since been reversed by the hon'ble Punjab and Haryana High Court while reconsidering the matter in the case of Sirsa Industries v. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of keeping mercantile system of accounting and claim of deduction of sales tax from the profits without making actual payments, was allowed, such a point did not directly arise in Chowringhee Sales Bureau's case [1973] 87 ITR 542. In Chowringhee Sales Bureau's case [1973] 87 ITR 542, the sole point for consideration was whether an auctioneer would be a dealer within the meaning of the Bengal Finance (Sales Tax) Act, 1941. In the Sale of Goods Act, 1930, an auctioneer is neither the seller nor the buyer and is merely a commission agent. In an earlier decision, the Calcutta High Court had a declared the provision whereby an auctioneer was made liable to sales tax as ultra vires, and, therefore, the precise question before the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owringhee Sales Bureau v. CIT [1977] 110 ITR 385, by the Calcutta High Court, the precise question, which is before us, arose relating to the same assessee, namely, Chowringhee Sales Bureau P. Ltd., who was also before the Supreme Court in [1973] 87 ITR 542. In Chowringhee Sales Bureau P. Ltd.'s case [1977] 110 ITR 385 for two later assessment years, Chowringhee Sales Bureau (P.) Ltd. collected certain amounts as sales tax and deduction was claimed on the basis of accrual of liability for maintaining the mercantile system of accounting although the amount had not been paid to the sales tax authorities. Up to the Tribunal, the assessee failed but succeeded before the Calcutta High Court. The relevant headnote of the Income-tax Reports is as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Officer had rightly allowed the deduction in the original assessment framed by him. Once the assessment orders were rightly framed, no case for rectification or for reopening under section 147/148 and 154/155 of the Act arises and the notices are clearly illegal and without jurisdiction." In our opinion, the aforesaid decision cannot be ignored by accepting the specious argument of Shri Sawhney that the Division Bench had misread the judgment of the Supreme Court in Chowringhee Sales Bureau (P.) Ltd. [1973] 87 ITR 542 and the orders passed by the Commissioner of Income-tax (Appeals) and the Tribunal cannot be treated as vitiated by an error because for the purpose of deleting the addition made by the Assessing Officer by invoking sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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