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01-07-2019, S L Lumax, Section 260A, 28(iv), 41(1), 38, HIGH COURT OF MADRAS

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2 days 13 hours ago #10046 by amit
Section - 260A, 28(iv), 41(1), 38
Order Date - 01-07-2019
Favouring - Assessee
Court - HIGH COURT OF MADRAS
Appellant - CIT
Respondent - S L Lumax Ltd
Justice - T.S.SIVAGNANAM & V.BHAVANI SUBBAROYAN
Citation - 719Taxpundit142
Appeal No. - TCA.No117 of 2018
Asstt. Year - 2010-2011

Order

PER : T.S.Sivagnanam, J.

This appeal filed by the assessee under Section 260 A of the Income Tax Act, 1961 (hereinafter referred to as the Act) is directed against the order dated 21.10.2016 passed by the Income Tax Appellate Tribunal Madras 'C' Bench in I.T.A.No.1578/mds/2016 for the Assessment Year 2010-2011

2. The revenue has filed this appeal raising the following substantial questions of law:

“ (i) Whether on the facts and in the circumstances of th case the order of the Tribunal erroneous in law and perverse on facts.

(ii) Whether on the facts and in the circumstanc s of the case the order of the Tribunal was right in holding that the remission of the loan liability by availing the early repayment and discount scheme of the Government with respect to the deferred sales tax under Interest Free Sales Tax deferral scheme is not income under Section 28(iv) r.w. 41(1) of the Act, even though the assessee had collected a sum of Rs.5,79,43,346/- as sales tax and had paid only an amount of Rs.3,58,79,577/- and had retained the balance income of Rs.2,20,63,219/-

(iii) Whether on the facts and in the circumstances of the case the Tribunal was right in not following the decision of the jurisdictional High Court in the case reported in 384 ITR 530(Mad).”

3. We have heard Mr.T.R.Senthil Kumar, learned Senior Standing Counsel for the appellant/Revenue and Mr.R.Venkatanarayan, learned counsel for M/s. Subbaraya Aiyar Padmanabhan and Ms.Ramamani, learned counsel for the respondent/assessee.

4. The revenue preferred an appeal before the tribunal challenging the order passed by the Commissioner of Income Tax(Appeals)-15' (hereinafter referred to as CIT(A)) in ITA No.544/CIT(A)-15/13-14 dated 25.02.2016 by which the CIT(A) deleted the addition of Rs.2,20,63,819/- made by the Assessing Officer under Section 41(1) read with Section 28(iv) of the Act.

5. The assessee has availed deferral scheme for sales tax liability called interest free sales tax deferral scheme introduced by Government of Tamil in the year 1990. In terms of said scheme, the eligible units are allowed to collect sales tax and retain for a prescribed period. The assessee opted under the scheme for nine years and after such period, the sales tax collected by the assessee should be remitted by it either in lumpsum or in installments. The Government of Tamil Nadu vide order in G.O(Ms).NO.48 had allowed an option to persons taking the benefit of deferral scheme, to pay the deferred tax in one lumpsum at the discounted rate of 8%. The assessee availed the benefit under the said G.O., thereby the assessee received a rebate of Rs.2,20,63,819/-. The Assessing Officer has opined that the assessee has received benefit, which would fall under Section 41(1) read with Section 28(iv) of the Act and therefore made the addition.

6. The assessee challenged the same by filing an appeal before the CIT(A), which was allowed by following the decision of the High Court of Karnataka in CIT Vs.Mcdowell & CO Ltd reported in 369 ITR 684 and the decision of the High Court of Bombay in the case of CIT Vs. Sulzar India Ltd reported in 369 ITR 717, wherein it was held that Section 41(1) of the Act was not attracted to such benefit on account of pre-payment at discounted rate.

7. The revenue preferred an appeal before the Tribunal contending that the similar issue was decided in favour of the revenue by the Hon'ble Supreme Court in CIT Vs. Thirumalaiswamy Naidu & Sons reported in 230 ITR 534 (SC). The Tribunal after considering the case of the revenue, held in

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