P.V.H.CASTINGS vs. THE INCOME TAX OFFICER

ITA/242/2013HC KeralaKLHC01026127201329 October 2013Author: HONOURABLE MR.JUSTICE A.M.SHAFFIQUE,HONOURABLE THE CHIEF JUSTICE DR. MANJULA CHELLUR7 pages
AI SummaryDismissed

What were the facts?

The assessee, P.V.H. Castings, collected sales tax amounting to ₹33,67,719. Out of this, only ₹12,24,151 was remitted to the department. The balance of ₹21,43,568 was added to the assessee's total income. The assessee contended that since the State of Kerala permitted payment of outstanding sales tax on an installment basis, it should be deemed paid as per CBDT Circular No. 674 dated 29/12/1993. The Department argued that the unpaid amount formed part of the total receipts as it remained unpaid to the government. The sales tax collected was not reflected in the profit and loss account but was shown as sundry creditors in the balance sheet. The issue hinges on the interpretation of CBDT Circular 674.

What did the High Court hold?

The High Court held that the Tribunal was justified in its order. The Court found that the concession shown to the taxpayer was a single instance and not a general deferral scheme mooted by the State of Kerala. In light of the specific instructions in CBDT Circular No. 674, particularly paragraphs 2 and 3, which refer to deferral schemes notified by State Governments, a single instance of installment payment does not qualify as such a scheme. The Court noted that the outstanding amount was not converted into a loan at any point, and there was no specific deferral scheme launched by the State of Kerala. Therefore, the benefit claimed by the assessee was not available. The Court found no good reason to interfere with the Tribunal's order.

What were the issues?

1. Whether the outstanding sales tax collected by the assessee, permitted to be paid in installments by the State of Kerala, is to be treated as deemed paid for the purpose of income tax, relying on CBDT Circular No. 674 dated 29/12/1993? (Question of law) Assessee's Contentions: - The assessee argued that the permission granted by the State of Kerala to pay outstanding sales tax on an installment basis constitutes a deferral scheme, and therefore, the amount should be deemed paid as per CBDT Circular No. 674 dated 29/12/1993. They relied on paragraphs 2 and 3 of the said circular. Revenue's Contentions: - The Revenue contended that the collected sales tax, if not remitted to the government by the due date, forms part of the assessee's total receipts. They argued that the installment payment arrangement did not amount to a deferral scheme as contemplated by the circular, especially since it was a single instance and not a general scheme applicable to all taxpayers.

Which sections of the Income-tax Act were involved?

Not specified

AI-generated summary — verify with the full judgment below

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 TUE AY, 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 DATED 22-03-2013 APPELLANT/APPELLANT: ----------------------------- P.V.H.CASTINGS ANAKUZHIKARA, KUTTIKKATUR, CALICUT-673 008 PAN:AAGFP8915K. 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-1OF ORDER OF ASSESSMENT FOR 2004-05 DT.14/12/2009 ANNEXURE.A-2OF THE APPELLATE ORDER DT.31/3/2011 ANNEXURE.A-3OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL //// PS to Judge. uj.

MANJULA CHELLUR

The order continues below.

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