Ita/242/2013 Of P.v.h.castings v. The Income Tax Officer

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR &THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE TUESDAY, THE 29TH DAY OF OCTOBER 2013/7TH KARTHIKA, 1935 ITA.No. 242 of 2013 () -----------------------AGAINST THE ORDER IN ITA 520/2011 of I.T.A.TRIBUNAL,COCHIN BENCH DATED22-03-2013 APPELLANT/APPELLANT: ----------------------------- P.V.H.CASTINGS ANAKUZHIKARA, KUTTIKKATUR, CALICUT-673 008 PAN: . BY ADVS.SRI.ANIL D. NAIR SRI.R.SREEJITH SMT.NIVEDITA A.KAMATH RESPONDENT/RESPONDENT: -------------------------------- THE INCOME TAX OFFICER WARD NO.2(3), KOZHIKODE. BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 29-10-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA 242/13-------------- APPENDIX PETITIONER(S)' EXHIBITS ------------------------------ ANNEXURE.A-1 TRUE COPY OF ORDER OF ASSESSMENT FOR 2004-05DT.14/12/2009 ANNEXURE.A-2 TRUE COPY OF THE APPELLATE ORDER DT.31/3/2011ANNEXURE.A-3 TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATETRIBUNAL //True copy// PS to Judge. uj. MANJULA CHELLUR, CJ & A.M.SHAFFIQUE, J. --------------------------------------------- I.T.A.No.242 OF 2013---------------------------------------------Dated 29[th] October, 2013 JUDGMENT Manjula Chellur,C.J Heard learned counsel representing theappellant assessee as well as learned Standing counsel forthe respondent Department. 2.The undisputed facts in this case are theappellant assessee had collected sales tax to the extent of₹.33,67,719/- which had to be paid to the Department.However, out of this amount, only .12,24,151/- came to₹be remitted and the balance of .21,43,568/- was added to₹the total income of the taxpayer. According to theassessee, since the State of Kerala permitted the taxpayerto pay outstanding sales tax on installment basis, it isdeemed to be paid as per CBDT circular 674 dated29/12/1993. According to the Department, this forms part of total receipt as the said amount remains unpaid in thecase of taxpayer till it is paid to the Government before thedue date. So far as the facts of the present case, apparentlysales tax collected was not reflected or credited in theprofit and loss account. However, it was shown as Sundrycreditors in the balance sheet. Entire issue revolves aroundCBDT circular referred to above. If the payment ofinstallment by the State of Kerala becomes deferralscheme, definitely the intention expressed in the abovecircular would be helping the taxpayers. Paragraphs 2 and3 of the circular are very relevant which reads as under inorder to understand, whether the orders of the Governmentgranting installments to the taxpayers was deferral schemeas indicated in the circular. “2.It has since been broughtto the notice of the Board that someState Governments, instead ofamending the Sales Tax Act, haveissued Government orders notifyingschemes under which sales tax is deemed to have been actuallycollected and disbursed as loans.Such Government orders also providethat entries shall be made in theGovernment accounts giving effect todeemed collections by crediting theappropriate receipt- heads relating tosales tax collections and debiting theheads relating to disbursal of loans.It has, therefore, been representedthat, as such conversion of the salestax liability into loans have similarstatutory effect as can be achievedthrough amendments of the SalesTax Act, the amounts covered underthe scheme should be allowed asdeduction for the previous year inwhich the conversion has beenpermitted by the State Governments. deemed to have been actuallycollected and disbursed as loans.Such Government orders also providethat entries shall be made in theGovernment accounts giving effect todeemed collections by crediting theappropriate receipt- heads relating tosales tax collections and debiting theheads relating to disbursal of loans.It has, therefore, been representedthat, as such conversion of the salestax liability into loans have similarstatutory effect as can be achievedthrough amendments of the SalesTax Act, the amounts covered underthe scheme should be allowed asdeduction for the previous year inwhich the conversion has beenpermitted by the State Governments. 3.The Board have consideredthe matter and are of the opinion thatsuch deferral schemes notified by theState Governments through theGovernmentordersmeettherequirements of the Board's CircularNo.496, dated 25/9/1987, in effectthough in a different form. Accordingly, the Board have decidedthat the amount of sales tax liabilityconverted into loans may be allowedas deduction in the assessment for theprevious year in which suchconversion has been permitted by orunder the Government orders.” It is not in dispute that the concession shown to the taxpayers was a single instance and it is not a generaldeferral scheme mooted by State of Kerala. In that view ofthe matter, in the light of specific instructions in thecircular at paragraphs 2 and 3, unless it is a deferralscheme mooted by the State of Kerala in general applicableto the taxpayers standing on par with the assessee inquestion, it cannot be a single instance which can becalled as deferral scheme. In the absence of any notificationby State of Kerala, the benefit claimed by the taxpayerassessee is not available. 3. In that view of the matter, the Tribunal wasjustified in saying that the outstanding amount was not ITA 242/13 converted into loan at any point of time and further therewas no specific deferral scheme launched by the State ofKerala. We find no good reason to interfere with the orderof the Tribunal. Appeal is dismissed. (MANJULA CHELLUR) CHIEF JUSTICE. uj. (A.M.SHAFFIQUE) JUDGE.