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TMI Blog1994 (11) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... e relatives of G. N. Agrawal on the ground that the amount on which interest was paid came out of invalid gifts ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the jetty charges on barge loading expenses paid to Mahesh and Rajiv Mor were not allowable business expenditure ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not entitled to claim deduction on account of gratuity liability on the ground that the provisions of section 40A(7) have not been complied with ? 4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not entitled to deduction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the liability for sales tax had arisen long back and not during the accounting year under consideration. The liability related to the assessment years 1963-64 and 1964-65. The sales tax assessment order was dated November 12, 1968. The assessee paid a total sum of Rs. 22,780.70 during the period April 1, 1973, to March 30, 1974. There is no dispute about the fact that these payments related to sales tax liability for the assessment years 1963-64 and 1964-65 for which the sales tax assessment order has been made on November 12, 1968. The assessee's plea before the Income-tax Officer was that since the payments were made during the year 1973-74 according to the instalments granted by the sales tax authority, the claim for deduction of the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration. The only submission of learned counsel for the assessee is that the payments were made by the assessee in the accounting year relevant to the assessment year under consideration. No claim had been made in the past in respect of the very same amount. It is not a case where the assessee is claiming deduction twice. According to learned counsel, the assessee did not claim deduction earlier in the assessment years 1963-64 and 1964-65 to which the liability related or in the year in which the demand was made by the Sales Tax Department inasmuch as it was disputing the liability. The assessee has claimed the deduction in the year in which the payment was made. In such a situation, according to learned counsel, the method of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales tax liability in appeals and that it had made no provision in its books with regard to the payment of that amount. The appeals to higher authorities or courts taken by the assessee contesting its liability to pay the sales tax ultimately failed. The Supreme Court held that the obligation to pay tax arises and taxability is attracted under all sales tax laws, the moment a dealer makes either purchases or sales which are subject to taxation. It was further observed that although that liability cannot be enforced till the quantification is effected by the assessment proceedings the liability for payment of tax is independent of the assessment. It was further observed (at page 366 of 82 ITR). It is not possible to comprehend how the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 963-64 and 1964-65 in the assessments for those assessment years, Even if the submission of the assessee is accepted that according to him he was not liable to pay any sales tax for the assessment years 1963-64 and 1964-65 and hence no liability accrued during the account years relevant to those assessment years, he did incur enforceable legal liability on and from the date on which he received the Sales Tax Officer's notice of demand for payment of the amount which was on November 12, 1968. The said liability remained intact even after the assessee had taken appeals, to higher authorities or courts which failed. The ultimate rejection of the appeal of the assessee in the High Court was also not in the accounting year relevant to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales tax during the previous year relevant to the assessment year in which the deduction was claimed. In the instant case, the claim has been made even much later. It has been made in the year when the actual payment was made. We also find it extremely difficult, in the face of the decision of the Supreme Court in Kedarnath Jute Mfg. Co.'s case [1971] 82 ITR 363, to agree with the decision of the Orissa High Court in Kalinga Tubes Ltd. v. CIT [1988] 169 ITR 374, where it was held that the assessee who maintains its accounts on the mercantile system can claim deduction in the year when the liability of sales tax was finally determined by the Sales Tax Tribunal. In our opinion, this decision goes counter to the decision of the Supreme Court w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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