DIGVIJAY CEMENT CO LTD Vs. DEPUTY COMMISSIONER OF INCOME TAX
INCOME TAX APPELLATE TRIBUNAL
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Phool Singh, Judicial Member -
(1.) THIS appeal of the assessee is directed against order dated 31-1-1994 recorded by the CIT (Appeals)-I, Rajkot by which the appeal of the assessee relating to assessment year 1992-93 was disposed of.
(2.) The relevant facts for disposal of this appeal are that the assessee filed a return of income for assessment year 1992-93 declaring a 'Nil' income. This return of income of the assessee was processed by the Assessing Officer under Section 143(1)(a) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') and intimation was sent to the assessee on 11-5-1993 computing total income at Rs. 4,83,10,445 by making the following adjustments in the total income returned by the appellant:-
Initially by mistake the intimation issued by the Assessing Officer on 11-5-1993 was of loss instead of income of Rs. 4,83,10,445. The assessee moved an application on 24-6-1993 under Section 154 of the Act for rectification of the mistake said to be apparent in the order under Section 143(1)(a) on the ground that the aforesaid three adjustments to the returned income were beyond the scope of Section 143(1) (a) as the same do not come under the category of prima facie "adjustments". On merits also the assessee contended that earlier years' expenses included Rs. 46,88,996 which was provision for gratuity relating to earlier year which was already considered and disallowed under Section 43B of the Act. This plea of the assessee was found correct by the Assessing Officer on verification of the plea raised by the assessee and the amount of Rs. 31,31,180 disallowed on account of earlier years' expenses, was deleted vide order dated 21-7-1993 recorded on the application of the assessee moved under Section 154 of the Act. The other contention of the assessee was that interest on outstanding sales tax calculated at Rs. 7,38,11,883 has wrongly been added because the same does not form part of sales tax to be disallowed under Section 43B of the Act and is not to be adjusted in the provisions of Section 143(1)(a). This contention of the assessee was rejected and the third adjustment of Rs. 6,10,803 was also confirmed by the same order dated 21-7-1993.
The assessee, feeling aggrieved from the order of the Assessing Officer recorded under Section 154 of the Act, preferred an appeal before the learned CIT(A) against remaining two adjustments of Rs. 6,10,803 relating to expenses on presentation of articles under rule 6B of the Income-tax Rules framed under the Act and Rs. 7,38,11,883 adjusted under Section 43B of the Act relating to interest on arrears of sales tax. The learned CIT(A) considered the contentions of the learned counsel for the assessee and concluded that the Assessing Officer was not justified in rejecting the contention of the assessee relating to expenses of Rs. 6,10,803 incurred by the assessee for purchase of presentation articles where the cost of each article exceeded Rs. 200. Accordingly the Assessing Officer was directed to delete this addition. However, the learned CIT(A) vide impugned order rejected the contention of the assessee relating to second adjustment of Rs. 7,38,11,883 added in the income of the assessee on account of interest on arrears of sales tax due and not paid in the year under consideration by invoking the provisions of Section 43B of the Act. The assessee has challenged the order of the CIT(A) relating to this part of the order of CIT(A).
(3.) THE contention of the learned counsel for the assessee is that the assessee has claimed deduction of Rs. 7,38,11,883 on account of interest on outstanding sales tax amount calculated at the rate of 24% per annum due under Section 47(4A) of the Gujarat Sales-tax Act as the same is statutory liability and that being the amount of interest on sales-tax will not be covered under the provisions of Section 43B where the word 'tax', 'duty', 'cess' or 'fee' alone is mentioned. THE amount claimed as deduction by the assessee was not disallowable. THE other legal plea of the assessee is that in the immediate preceding year, i.e., assessment year 1991-92 relating to assessee itself, the Assessing Officer had made similar prima facie adjustments but deleted the same when the application under Section 154 of the Act was moved by the assessee and that fact makes this issue debatable as the amount of interest on arrears of sales tax is to be treated as part of tax or not or in other words disallowable under Section 43B of the Act on the ground of its non-payment or not and once it is debatable question, that goes out of the ambit of section .143(1)(a) of the Act and both the authorities below were not justified in rejecting both the contentions of the assessee. As against this, the learned DR has placed reliance on the orders of the authorities below and contended further that the word 'tax' used in Section 43B(a) is used in wider sense and the learned CIT(A) has rightly placed reliance on the decision laid down in the case of Mahalakshmi Sugar Mills Co. v. CIT  123 ITR 429 (SC) which was based on the similar issue and interest on arrears of cess imposed under the U.P. Sugarcane Cess Act, 1956 was treated as part and parcel of tax and this analogy is applicable to the facts in hand. Secondly, the learned CIT(A) rightly repelled the other contention of the learned counsel for the assessee that the order of the Assessing Officer in the immediately preceding year treating the said amount of interest as not disallowable, will not make the matter debatable as each assessment year is separate one and once a mistake has committed the same cannot be allowed to continue for the future years.;
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