9911796707
TMI Blog1991 (5) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... was deductible in accounting the total income for the assessment year 1975-76 ?" Shortly stated, the facts leading to this reference are that the assessee claimed deduction of Rs. 2,21,386 during the year under appeal being liability for sales tax pertaining to the accounting years ending December 31, 1970, and December 31, 1971. The assessee's case before the Income-tax Officer was that it came to know for the first time on December 14, 1974, that it was under an obligation to pay sales tax on the goods imported for supply of the same to the Director-General of Supplies and Disposals which are specifically excluded as per terms and conditions contained in the schedule for acceptance of tenders for supply of those goods to the Director G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to hold that the assessee's liability to pay sales tax arose at the point of time when tax was demanded by the Sales Tax Officer by issue of notices. He, however, found that sum of Rs.1,05,310 being sales tax for the accounting period ending December 31, 1970, was demanded by issue of notice dated December 14, 1974, and the amount of Rs. 1,16,076 being tax for the accounting period ending December 31, 1971, was demanded by notice dated November 4, 1975. Hence, the Appellate Assistant Commissioner allowed the assessee's claim for deduction to the extent of Rs. 1,05,310 only which was demanded during the previous year relevant to the assessment year under consideration. Being aggrieved with the order of the Appellate Assistant Commissioner d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it was not paid although liability accrued. Hence, the supplier as well as the purchaser proceeded on the footing that no sales tax was leviable on the items in question. It was after the judgment of the Supreme Court in the case of K. G. Khosla and Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes [1966] 17 STC 473, that the question of imposition of sales tax arose. There the question was whether the sales by the assessee to the Government departments were in the course of import and exempt from taxation under section 5(2) of the Central Sales Tax Act, 1956. It was held that the sales were exempt from taxation as the sales took place in the course of import of goods under section 5(2) of the Act. This decision held the field ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner with the Director-General of Supplies and Disposals. It is after the judgment of the Supreme Court in Binani Bros. (P.) Ltd. [1974] 33 STC 254 that the assessee was served with the demand notice during the relevant previous year. Our attention has been drawn to a decision of the Division Bench of this court in the case of CIT v. Teesta Valley Co. Ltd. [1991] 187 ITR 657, where this court held that the liability in such a case accrues only when the liability becomes real and enforceable. In the instant case, the liability accrued and arose and became real and enforceable in the previous year under reference when the demand notice was served by the Commercial Tax Officer demanding the sum of Rs. 1,05,310. In our view, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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