D.C.I.T. CENTRAL CRICLE,1(2), NAGPUR vs. M/S SOLAR CAPITAL LIMITED, NAGPUR

:.Nos.197to 2AO/NAG/2015 {+sSsme:ut Ytears:Z(f;-U( Lu 2()u8-O9 IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P K; BANSAL VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER LIA Nosl97 to ZQQNAG/2015 Assessment_Years;2005-06 to 2008-02 Dy.CIT, Central Circle-1(2}, Nagpur. Vs. M/s Solar Capital Limited, Dhakate Building; Fawara Chowk, Gandhibag; Nagpur: PAN:AABCS 8191 € (Respondent) (Appellant) Appellant by Respondent by_ Date_gf hearing Date Qf pronouncement Shri Geetesh Kumar; DR Shri C. N, Rathi, CA 20/11/2017 21/11/2017 ORDER PER PK BANSAL VP:

AIl these appeals have been filed by the Revenue against the respective orders of the CIT(A)-III; Nagpur all dated 20/03/2015 relating to RrElOAassessment years 2005-06 to 2008-09 by taking the following common rounds of appeal except change in figures: 1 On the facts and in the circumstances Of the case and in "OjH= law; whether the Learned CIT(A) erred in directing to delete the addition of Rs.1,10,69,365/- made by the Assessing Officer on account Of Sales Tax deferral claimed by the assessee as capital receipt ? 2 On the facts and in the circumstances Of the case ad in Iaw; whether the Learned CITIA) erred in not upholding the fiIndings of the Assessing Officer that the deferred sales tax liability i5 chargeable to tax a5 business income On remission thereaf u/s 41(1} Of the IT Act and treating it a5 exempt from tax as capital receipt, being remission Of future liability ?" L.T'/ Ntvs [CI7 tw 2UO/NAG/ZO[5 {ssemsnint Ycilrs;2005-06 Ec 204)A-(9 2 Both thee parties agreed that all the appeals be decided On the basis of facts involved for the assessment year 2005-06_ 3 The facts of the case; in brief, relating to assessment year 2005-06 are that the Assessing Officer noted that the assessee has claimed gain on premature payment of sales tax deferment loan a5 capital recelpt and therefore, deducted the same from the total income The Assessing Officer did not agree with the claim of the assessee The assessee submitted that the assessee i5 entitled for sales tax incentive under the PSI Scheme of 1993 of Government of Maharashtra for deferral of sales tax payment: In view Of this, the amount So coliected was converted into Ipan as per the Isales tax scheme and was retained by the assessee as loan: The schedule of repayment of this loan was also fixed as per deferment scheme and the first installment of repayment was due after 10 years. The dealer was given the option to discharge his loan liability as per 4"n proviso of section 38(4) of Bombay Sales Tax Act; 1959 read With Rule 31d of Bombay Sales Tax Rules 1959 in respect Qf any payment of such reduced amount as may be prescribed: The Maharashtra Government prescribed the scheme by which it was provided that the dealer can opt for repayment oF loan liability if the repayment of lpan a5 per net present value is made by dealer , Accordingly, the assessee opted for the repayment and applied to Commissioner of Sales Tax which allowed the assessee facility for repayment and accordingly, the assessee made the repayment and got the relief as claimed by the assessee as capital recelpt: Since the assessee has claimed it as a capital receipt as it was remission Of loan liability, the Assessing Officer relied on Circular No. 496 dated 25/09/1987 as well as the provisions of section 43B of the Act and took the view that the assessee paid only as part of one time settlement therefore, the beneflt sQ received bv the assessee is a revenue receipt: The assessee went in appeal before the CIT(A) wio deleted the said addition, 1.T#Yas ] (J7 (c 200/166/2015 Assessie't Yurs 24h0S-{I6 1:' 21)(8-(19 We have hard the rival submissions, carefully considered the same along with thev orders of the tax authorities below_ We noted that this issue has come Up for adjudication before this Bench of the Tribunal in the case of Solar Capitals Limited vs. ACIT in I.T.A.Nos. 128 to 134/Nag/2010 for the assessment years 2002-03 to 2007-08 in which, this Tribunal vide order dated 03/04/2013 decided this issue following the decision of Special Bench of the Tribunal in the case of Sulzer India Limited vs. DCIT 134 TT) 385 as under: "18.4 After considering the submission and perusing the material 0n rocord, we found that this issue is covered by the decision of 'the Special Bench of the Tribuinal in Sulzer India Limited (supra}: After considering various decisions 0f various Courts; the Special Bench has held thal; "deferred sales tax liability, being the difference payment of NPV against the fulure liability credited by the assessee under the capital resenve account in its books of account, IS ? capital receipt and cannot be termed as remissior/cessation of Iiability in terms of Section 41) a5 they are not revenue receipt Accordingly, we direct the AQ to allow the issue in favour of the asses888 in the light of the decision of the Special Bench in the case af Sulzer India Limited (supra): Xv 4.1 The decision of this Tribunal in the case 0f Sulzer India Ltd, has been confirmed by Nagpur Bench of Hon*ble Bombay High Court in Income Tax Appeal Nos. 141 to 146 and 149 of 2013 vide judgment dated 13/08/2015, 4.2 No contrary decision was brought to our knowledge Respectfully following the decision of this Tribunal in the case of Solar Capital Limited (supra) we confirm the order of CIT(A) and dismiss all the appeals filed by the Revenue: 5 In the result; all the appeals of the Revenue stand dismissed. (Order was pronounced in the open court on 21/11/2017 Sq (PAWAN SINGH) P K: BANSAL ) Judicial Member Vice President Dated:21/11/2017 *Singh