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TMI Blog1996 (7) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Appellate Tribunal with a direction to redo the same. Consequently, a revised assessment order was made under section 143(3) of the Act. While doing so, the Income-tax Officer disallowed the sum of Rs. 10,69,034 claimed by the assessee towards deduction from purchase tax liability. As against the said assessment, an appeal was filed before the Commissioner of Income-tax. The Commissioner by the order dated September 26, 1985, found that there was a liability to pay the purchase tax as on March 31, 1979, for which a provision had been made by the assessee. Accordingly, the Commissioner allowed the deduction towards the liability to pay purchase tax. As against the said order, the Revenue filed an appeal before the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts involved in the question of law formulated. 1. The assessee was not liable to pay purchase tax on prawns purchased for export. 2. There was exemption from purchase tax for the relevant period. 3. There was demand of tax for Rs. 85 only for the relevant year. 4. The assessee challenged the levy before the courts. At the outset, we may state, the circumstances of facts pointed out as revealed from the question of law framed for decision are the circumstances which undoubtedly came into being after the liability to pay the purchase tax arose. It is difficult for us to conceive how those circumstances can be included in a question of law framed for decision. Anyway, we will now advert to these circumstances one after other. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. As far as the second circumstance stated above, namely, that the exemption from purchase tax for the relevant period was available, the reference has to be made to the order passed by the Commissioner of Income-tax. The Commissioner in paragraph 13 of the order says thus : " The relevant notification exempting the trade from purchase tax is dated March 29, 1977. That notification was received by the appellant much later. In the circumstances, there was a liability to pay purchase tax as on March 31, 1979, for which a provision has been made by the appellant ". Whatever that be, since the assessee is a registered dealer under the Kerala General Sales Tax Act, he is legally obliged to show the exempted turnover also in the monthly return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Bench which considered the above Supreme Court and the Full Bench decision observed in Abad Fisheries' case [1995] 213 ITR 694 thus : " The principle emanating from the above discussion is that a provision in the accounts made by an assessee following the mercantile system of accounting, for liability to sales tax (though disputed), is yet liable to be allowed as business expenditure, if there was a bona fide reasonable apprehension on the part of the assessee that the amount will become payable. " The above decision was again followed by us in I. T. R. Nos. 130 to 132 of 1991 (Baby Marine Exports v. CIT [1997] 225 ITR 631 (Ker)). In that case also, in view of the ascertained character of the liability, the provision for purchase tax wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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