Sattsh Chandra, C.J. - (1.) The assessee is a private limited company. It carries on business of manufacture and sale of paints. The assessment year in question is 1975-76, the accounting period ending on December 31, 1974.
(2.) It appears that the assessee-company took over on lease the business of manufacture of paints from Messrs. Paints & Colour Products under a registered deed of lease dated April 5, 1972, on payment of Rs. 7,500 as lease rent.
(3.) During the assessment proceedings, the assessee claimed deduction on account of sales tax payments which included an amount of Rs. 50,507. This amount was paid by the assessee on account of the liability of sales tax for business done earlier by the lessor (of the assessee). The Income-tax Officer disallowed this claim on the ground that it pertained to a period prior to the commencement of the lease. The assessee went up in appeal and succeeded. The Appellate Assistant Commissioner held that in view of Section 17 of the Bengal Finance (Sales Tax) Act, 1941, as well as the terms of the lease deed between the parties, the assessee was entitled to claim the deduction.;