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Frigoscandia Winner Food Process Vs. Dy. Cit - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Indore
Decided On
Reported in(2001)79ITD357Indore
AppellantFrigoscandia Winner Food Process
RespondentDy. Cit
Excerpt:
these appeals by the assessee are directed against the orders of the commissioner passed under section 263 of the income tax act, 1961 (hereinafter referred to as the act) for the assessment year 1992-93.since common issue is involved, these appeals were heard together and are being disposed of by this consolidated order for the sake of convenience.ita no. 1225/(ind) of 1996 : in this appeal the assessee has assailed the order of the commissioner on the substantive ground that he has erred in setting aside the assessment order on the ground that the deduction allowed for deferment of sales-tax was erroneous and prejudicial to the interests of the revenue.we have heard the rival submissions and carefully perused the orders of the authorities below and the documents placed on record.the.....
Judgment:
These appeals by the assessee are directed against the orders of the Commissioner passed under section 263 of the Income Tax Act, 1961 (hereinafter referred to as the act) for the assessment year 1992-93.

Since common issue is involved, these appeals were heard together and are being disposed of by this consolidated order for the sake of convenience.

ITA No. 1225/(Ind) of 1996 : In this appeal the assessee has assailed the order of the Commissioner on the substantive ground that he has erred in setting aside the assessment order on the ground that the deduction allowed for deferment of sales-tax was erroneous and prejudicial to the interests of the revenue.

We have heard the rival submissions and carefully perused the orders of the authorities below and the documents placed on record.

The facts emerging out of the orders of the authorities below in narrow compass are that the assessee has claimed deduction on account of deferment of payment of sales-tax to the tune of Rs. 3,42,749 which was initially disallowed by the assessing officer while issuing intimation under section 143(1)(a) of the Act but the same was later on allowed through its order passed under section 154 of the Act on the application of the assessee. Subsequently, regular assessment under section 143 was framed and the assessing officer allowed the deduction on account of deferment of payment of sales-tax to the assessee vide assessment order dated 15-1-1995.

On scrutiny, the Commissioner noticed that according to the provisions of section 22(3B) of the M.P. General Sales Tax Act, (hereinafter referred to as MPGST Act') when the sales-tax liability is converted into loan liability in accordance with the relevant provisions of MPGST Act, such sales-tax shall be deemed to have been paid in accordance with the Sales Tax Act of the state. The conversion of the sales-tax liability into loan liability by a specified agency i.e. M.P. Audhyogik Vikas Nigam is a prime condition to treat the Sales Tax Deferment as deemed payment under section 43B of the Act. It was also observed by him that in the instant case the specified agency had not issued any certificate to the effect that the loan liability under the sales tax deferment scheme has been created in the assessees case and as such the assessing officers action of allowing the deduction of sales-tax to the tune or Rs. 3,42,749 under section 43B of the Act was not correct and in accordance with the provisions of the Act. Considering the order of the assessing officer as erroneous and prejudicial to the interests of the revenue, Commissioner issued a show-cause notice to the assessee to explain as to why the assessment order should not be set aside being erroneous and prejudicial to the interests of the revenue. In response to the show-cause notice, the assessee has furnished the explanation before the Commissioner contending that the detailed enquiry was made by the assessing officer before allowing the claim of the assessee. It was also contended that the eligibility certificate dated 11-3-1994 issued by the Government of Madhya Pradesh (hereinafter referred to as the State Govt.) to the effect that the dealer has opted for the scheme of deferment of payment of sales-tax and the unit is eligible for availing the facility of deferment, was placed before the assessing officer to justify its claim. A reference to the Central Board of Direct Taxes Circular No. 497 dated 4-9-1987 was also made to the Commissioner. Having not satisfied with the explanations of the assessee, the Commissioner treated the assessment order as the erroneous and prejudicial to the interests of the revenue and set aside the assessment order with the direction to make the assessment afresh after affording an opportunity of being heard to the assessee.

Aggrieved with the order of the Commissioner the assessee has carried the matter before us and raised its arguments in two-folds. Mr.

Deshpande, the learned counsel for the assessee, has strenously argued that since the assessing officer has applied its mind to the claim of the assessee and after making detailed enquiry the claim of the assessee was allowed, the assessment order cannot be revised by the Commissioner by resorting to the provisions of section 263 of the Act.

In support of his contention, Mr. Deshpande has invited our attention to the intimation issued under section 143(1)(a) of the Act, rectification order allowing the claim of the assessee and the queries raised in this regard while framing the assessment under section 143(3) of the Act. It was further argued by him that once the assessing officer takes a particular view after due application of mind on a particular issue, the view taken by the assessing officer cannot be revised by the Commissioner under section 263 of the Act though he may not agree with the assessing officers view. In support of his contention, Mr. Deshpande has relied upon the following judgment : Gee Yee Enterprises v. Addl. CIT (1975) 99 ITR 375 (Del), Rampyari Devi Saraogi v. CIT (1968) 67 ITR 84 (SC), CIT v. Ratlam Coal Ash Co. (1988) 171 ITR 141 (MP), CIT v. Gabrial India Ltd (1993) 203 ITR 108 (Bom) CIT v. Shri Govindram Seksariya Charity Trust (1987) 166 ITR 580 (MP) Thalibai F. Jain v. ITO (1975) 101 ITR 1 (Karn), Smt. Tara Devi Aggarwal v. CIT (1973) 88 ITR 323 (SC) On merit, Mr. Deshpande has vehemently argued that the issue involved relating to the claim of deduction of sales-tax paid under the deferment payment scheme is covered by the judgment of the jurisdictional High Court in the case of CIT v. K.N. Oil Industries Ltd. (1997) 226 ITR 547 (MP). He further urged that necessary amendments with regard to the deferment of sales-tax liability were brought through Act No. 14 of 1988 in MPGST Act by inserting sub-section (3B) to section 22 with retrospective effect from 1-4-1981.

By virtue of the amended provision, if a registered dealer who belongs to any of the categories specified in section 22-D and has been granted the facility of deferment of payment of sales-tax, is liable to pay tax under the provisions of sub-section (2) or sub-section (3) or sub-section (4) and where a loan liability equal to the amount of tax payable by the dealer, as aforesaid, for the period of eligibility to avail of the said facility, has been created by any agency or agencies, as the State Government may, by general or special order, specify, then such tax shall be deemed to have been paid in accordance with the provisions of sub-section (2) or sub-section (4) as the case may be. To overcome the difficulty created by the provisions of section 43-B of the Act, according to which the payment of statutory liability is to be allowed in that previous year, in which the same is actually paid irrespective of the previous year in which the liability accrues, a Circular No. 496 dated 25-9-1987 was issued by the Central Board of Direct Taxes and the relief given by the State Government was duly recognised by the Board. Through this circular the Board has clarified that if the State Government makes an amendment in the Sales Tax Act to the effect that the sales-tax deferred under the scheme shall be treated as actually paid, such a deeming provision will meet the requirements of section 43B of the Act and the statutory liability shall be treated to have been discharged for the purpose of section 43B of the Act. He further invited our attention to the Circular No. 674 dated 29-12-1993 issued by the Central Board of Direct Taxes with the submission that this circular was issued to give effect to those deferral scheme notified by the State Government through the government orders instead of bringing the amendment to the statute. Though in this circular it was clarified that the amount of sales-tax liability converted into loans may be allowed as deduction in the assessments for the previous years in which such conversion has been permitted by or under the government orders but it was contended that this condition is applicable only in those cases where the claim has been raised under those deferral schemes which were notified by the State Government through the government orders. This condition is not applicable to those deferral schemes which were brought into effect by virtue of an amendment in the Sales Tax Act. Mr. Deshpande further urged that as per the provisions of section 22(3B) of the MPGST Act, the assessee is entitled to claim deduction of sales-tax liability on account of deferment of sales-tax scheme as soon as the specified agency issued an eligibility certificate to the assessee.

The learned Departmental Representative, on the other hand, has submitted that if the assessing officer does not apply his mind in view of the relevant provisions of law and takes a decision which is contrary to the existing provisions of law and his order is erroneous and prejudicial to the interests of the revenue, the Commissioner has jurisdiction to revise the assessment order passed. The application of mind by the assessing officer means the assessing officer should adjudicate the issue in the light of the existing provisions of law and prevailing judicial pronouncements of the higher authorities. In the entire assessment order there is no discussion about impugned issue.

The assessing officer has simply raised a query in this regard in a general questionnaire issued to the assessee but from that questionnaire no inference can be drawn that the assessing officer has applied his mind. Moreover, the amendment in the Sales Tax Act and the circulars issued by the Central Board of Direct Taxes were available before the assessing officer and he should have adjudicated the issue in the light of the same. Since the action of the assessing officer is against the existing guidelines and the relevant provisions of law, the Commissioner was justified in holding that the assessment order is erroneous and prejudicial to the interests of the revenue.

Mr. Brijesh Gupta, learned Senior Departmental Representative, further argued on merits that as per the provisions of section 43-B of the Act, statutory liabilities are allowed to be deducted only in those previous years in which they are paid irrespective of the previous year in which they have accrued. With the intent to give a fillip to certain industries, the State Government has introduced a deeming provision as sub-section (3-B) to section 22 of the MPGST Act, according to which if a registered dealer who belongs to a particular category and has been granted the facility of deferment of sales-tax, is liable to pay sales-tax and where a loan liability equal to the amount of tax payable by the dealer has been created by a specified agency, then such tax shall be deemed to have been paid in accordance with the provisions of this Act. By virtue of this amendment, deferment of sales-tax was allowed to the assessee but the problem with regard to its allowability in computation of income and the previous year in which the claim is to be raised, arose because as per the provisions of section 43-B, the statutory liabilities can only be allowed to be deducted in those previous years in which it was paid irrespective of the previous years in which they have accrued. To overcome this difficulty, the Central Board of Direct Taxes has issued a Circular No. 497 dated 25-9-1987 through which they have recognised the deferment of sales-tax scheme launched by various State Governments by making amendments in their Sales Tax Acts. With intent to give a full benefit to the assessee, the Board has decided through this circular that where amendments are made in the sales-tax laws on these lines, the statutory liabilities shall be treated to have been discharged for the purpose of section 43B of the Act. Again, a further controversy was raised with regard to the previous year in which the statutory liability shall be treated to have been discharged for the purpose of section 43B of the Act. For removing this confusion, further Circular No. 674 dated 29-12-1993 was issued by the Central Board of Direct Taxes clarifying that the deferral scheme can also be launched by the State Government through government orders instead of making the amendment in the Sales Tax Act. It was also clarified through this circular that the Board has decided that the amount of sales-tax liability converted into the loans may be allowed as deduction in the assessment year for the previous year in which such conversion has been permitted under the government orders. Since it has been clarified by the Board that the deduction of deferment of sales-tax liability can only be allowed on the conversion of the sales-tax liability into a loan liability, it cannot be allowed on issuance of the eligibility certificate by a specified agency. It was further contended by Mr. Brijesh Gupta that the Government had laid down a procedure by introducing a scheme containing rules and regulations forgiving effect to the new amendment brought by Act, No.14 of 1988. As per this scheme, the assessee has to undergo various stages before obtaining the conversion certificate from the competent authority. Only after obtaining the conversion certificate, the assessee can claim the deeming payment of sales-tax and deduction of the same can only be allowed in those previous years in which conversion was granted. Mere grant of the provisional eligibility certificate would not entitled the assessee to claim the deduction under the amended provisions on account of deeming payment of deferred sales-tax. In the instant case, till date nothing has been placed on record on behalf of the assessee that the sales-tax liability has in fact converted into the loan liability and certificate to this effect has been issued by the competent authority. Mr. Gupta further invited our attention to the judgment of the jurisdictional High Court in the case of K.N. Oil Industries Ltd. (supra) and contended that in this case their Lordships have simply examined the allowability of a claim under the deferment payment scheme. The eligibility criteria of the assessee for availing the benefit of deferment of sales-tax scheme was not raised before their Lordships. As such, they had no occasion to adjudicate the controversy raised in this appeal. Hence, the aforesaid judgment is not applicable to the present case.

On consideration of the rival submissions and from a careful perusal of record it is noticed that the claim of deduction on account of deferment of sales-tax was initially disallowed by the assessing officer while issuing intimation under section 143(1)(a) of the Act. On the rectification application of the assessee, the assessing officer has allowed the claim of the assessee vide its rectification order dated 19-9-1994 but the issue whether the assessee is entitled to the aforesaid deduction was not examined by the assessing officer in the light of the relevant provisions of the MPGST Act, the scheme announced by the State Government for this purpose and the circulars issued by the Central Board of Direct Taxes in this regard. Likewise, while framing the regular assessment the assessing officer has allowed the claim of the assessee without examining the issue of entitlement of the assessee in the light of the aforesaid provisions of laws and the Board circulars, though a formal query in this regard was raised from the assessee in the general questionnaires. In response to the query, the assessee has simply filed a letter from the government and the copy of the sales-tax account. From a careful perusal of the assessment order in the light of the reply to the queries furnished by the assessee, we are of the view that the issue of entitlement of deduction on account of deferment of sales-tax was not examined by the assessing officer in the light of circulars of the Board and the scheme pertaining to the rules for granting conversion certificate and the assessing officer has allowed the claim of the assessee without making any discussion on this issue in the assessment order. Though the circulars issued by the Central Board of Direct Taxes and the scheme launched by the State Government in this regard were in force and the assessing officer is governed by the circulars issued by the CBDT, the assessing officer has not adjudicated the issue in the light of above provisions. However, the Commissioner has examined the assessment order in the light of the relevant provisions of the MPGST Act, the scheme launched by the State Government in this regard, the Circular No. 496 dated 25-9-1987 and the Circular No. 674 dated 29-12-1993 before holding that the assessee was not entitled to the deduction claimed by it on account of deferment of sales-tax.

Before dwelling upon the impugned issue whether the assessee is entitled to the deduction on account of deferment of sales-tax in view of section 22(3B) of the MPGST Act, it is all the more necessary for us to examine the object of the new amendment and other consequential steps taken by the State Government and the Central Board of Direct Taxes to give proper effect to the newly amended provisions.

With the intent to give a fillip the State Government has introduced sub-section (3B) of section 22 of the MPGST Act vide Act No. 14 of 1988 with retrospective effect from 1-4-1981. According to the new provision, a registered dealer who belongs to any of the specified categories and had been granted the facility of deferment of payment of sales-tax, is liable to pay tax under other sub-sections of section 22 and where a loan liability equal to the amount of tax payable by the dealer has been created by any specified agency, then such tax shall be deemed to have been paid in accordance with the provisions of other sub-sections of section 22 of the MPGST Act. For ready reference, we reproduce sub-section (3B) of section 22 of the MPGST Act as under : "(3-B) Notwithstanding anything contained in any other provision of this Act, but subject to such conditions as may be prescribed, a registered dealer who belongs to any of the categories specified in section 22-D and has been granted the facility of the deferment of payment of tax, is liable to pay tax under the provisions of sub-section (2) or subsection (3) or sub-section (4) and where a loan liability equal to the amount of tax payable by the dealer as aforesaid for the period of eligibility to avail of the said facility has been created by any agency or agencies as the State Government may, by general or special order, specify then such tax shall be deemed to have been paid in accordance with the provisions of sub-section (2) or sub-section (3) or sub-section (4), as the case may be." After this amendment, the State Government has laid down a scheme for conversion of deferred sales-tax into the loan vide Notification No.16-16-86-Xl-B (89) dated 30-12-1989. In this scheme a detailed procedure for conversion of deferred tax into the loan liability has been given. As per rule 3 of this scheme an eligible unit shall apply in Form-A to the competent authority for conversion into a provisional loan liability of the deferred tax payable by it according to the returns of every year or part thereof covered by the period of the eligibility. Such applications accompanied with other documents i.e.

copies of returns under the State and Central Sales Tax Acts and the certified copy of the eligibility certificate issued by the competent authority, shall be made within 60 days of the date of expiry of the year or part thereof covered by the period of eligibility.

On receipt of the application in Form-A and the certification in Form-B from the appropriate Sales Tax Officer, the competent authority, shall verify the contents and if on verification the competent authority is satisfied, it shall pass an order in Form-D converting the amount of deferred tax into the provisional loan liability. A copy of the order sheet is sent by the competent authority to the eligible unit and the appropriate Sales Tax Officer. Thereafter, again the eligible unit shall make further application in Form-A to the competent authority to convert the total tax assessed into the final loan liability within 60 days from the final sales-tax assessment order and such application shall be accompanied by the copy of the final assessment order. On receipt of this application in Form-A and certification in Form-B from the appropriate Sales Tax Officer, the competent authority shall verify the contents of the application and if on verification the competent authority is satisfied with the contents, it shall direct the eligible unit in writing to execute an agreement in Form-C within 60 days of the receipt of such direction. On execution of the agreement by the eligible unit the competent authority shall pass an order in Form-D converting the amount of tax assessed by the assessing officer representing the deferred tax into the final loan liability. As per this scheme, the eligible unit has to undergo the entire process for obtaining the conversion certificate of its deferred tax into the loan liability. If the scheme is read in view of the amended sub-section (3-B) of section 22 of the MPGST Act, one would find that the deferred tax shall only be deemed to have been paid in accordance with the provisions of sub-section (2) or sub-section (3) or sub-section (4) of section 22 of the MPGST Act when the deferred sales-tax has been converted into the final loan liability and an order in Form-D is passed by the competent authority as per rule 3(2)(c) of the scheme for conversion of deferred tax into the loan liability. In this scheme, as specific provision has also been made for modification in the conversion certificate if the assessed tax is modified by an order in reassessment, appeal, revision or by order of any court. For ready reference, we reproduce the relevant provisions of the aforesaid scheme governing the procedure for conversion of deferred sales-tax into the loan liability.

(1)(a)(i) An eligible unit shall apply in Form A to the Competent Authority for the conversion into a provisional loan liability of the deferred tax payable by it according to the returns for every year or part thereof covered by the period of eligibility. Such an application shall be made within 60 days of the date of expiry of the year or part thereof covered by the period of eligibility.

(1)(a)(ii) Such eligible units that have gone into production on or after 1-4-1981 and upto the date of publication of this scheme and have opted for the deferment of payment of sales-tax under M.P. Deferment of Payment of Tax Rules, 1983 or the M.P. Deferment of Payment of Tax Rules, 1986, as the case may be, will also be eligible to apply for the conversion of the deferred tax payable by them into a provisional loan liability according to the returns for every year or part thereof, covered by the period of eligibility, within 60 days of publication of this scheme.

(i) Copies of the returns under the State Act and/or the Central Act, as the case may be, relating to the year or part thereof, the tax relating to which is sought to be converted into a loan liability.

(ii) A certified copy of the eligibility certificate issued by the Competent Authority.

(1)(c) On receipt of the application in Form A and the certificate in Form B from the appropriate Sales Tax Officer, the Competent Authority shall verify the contents of the application and satisfy itself that the particulars furnished therein are correct, and complete and that the amount of deferred tax sought to be converted into a provisional loan liability is the same as indicated by the appropriate Sales Tax Officer in his certificate in Form B. If on verification the competent authority finds that the application is incomplete, it shall require the eligible unit to furnish the relevant particulars. On furnishing such particulars by the eligible unit the competent authority shall pass an order in Form D converting the amount of deferred tax into a provisional loan liability.

(1)(d) A copy of the order passed under clause (c) shall be sent by the Competent Authority to the eligible unit and the appropriate Sales Tax Officer.

(2)(a) An eligible unit whose assessment under the Sales Tax Act and/or Central Act for any year or part thereof covered by the period of eligibility has been completed by the assessing authority, shall within 60 days of date of receipt of the order of assessment, make a further application in Form A to the competent authority to convert the total tax assessed into a final loan liability.

(2)(b) Every such application shall be accompanied by a copy of the assessment order passed by the assessing authority.

(2)(c) On receipt of the application in Form A and the certificate in Form B from the appropriate Sales Tax Officer, the Competent Authority shall verify the contents in the application in the manner stated in clause (c) of sub-rule (2) and having satisfied itself that the application is correct and complete and that the deferred tax sought to be converted into final loan liability is the same as indicated in the certificate in Form A received from the appropriate Sales Tax Officer, the Competent Authority shall direct the eligible unit, in writing, to execute an agreement in Form C within 60 days of the date of receipt of such directions. On execution of the agreement by the eligible unit the Competent Authority shall pass an order in Form D converting the amount of tax assessed by the assessing authority representing the deferred tax into a final loan liability.

(2)(d) A copy of the order passed under clause (c) shall be sent by the Competent Authority to the eligible unit and appropriate Sales Tax Officer.

(3)(a) Where an eligible unit has obtained an eligibility certificate under the Deferment rules before the date of publication of these rules in the "Madhya Pradesh Gazette" it shall make an application in Form A for each year or part thereof covered by the period of eligibility preceding such date within 60 days of that date for conversion of the deferred tax into : (i) a provisional loan liability, if the assessment for the year or part thereof has not been made by the assessing authority; or (ii) a final loan liability, if the assessment for the year or part thereof has been made by the assessing authority.

(i) copies of the returns under the State Act and/or Central Act, a copy of the order of assessment, (ii) a certified copy of the eligibility certificate issued by the competent authority.

(3)(c) On receipt of the application in Form A from the eligible unit and the certificate in Form B from the appropriate Sales Tax Officer, the Competent Authority shall verify the contents of the application and pass an order converting the deferred tax into a provisional or final loan liability in the manner specified in clause (e) of sub-rule (1) of clause (c) of sub-rule (2), as the case may be, (4)(a) Where any deferred tax relating to any year or part thereof covered by the period of eligibility and converted into a final loan liability is modified by an order in reassessment, appeal, revision or by order of any court, the eligible unit shall make an application in Form E to the Competent Authority within 60 days of the date of receipt of such order to modify the amount of the final loan liability." Realising the difficulty in giving effect to the amended provisions in the Income Tax Act, the Central Board of Direct Taxes has issued Circular No. 496 dated 25-9-1987 and clarified that if the State Government makes an amendment in the Sales Tax Act to this effect, the sales-tax deferred under the scheme shall be treated as actually paid and the statutory liability shall be treated to have been discharged for the purpose of section 43V of the Act. Necessary directions were also issued to all Commissioners of Income Tax for giving proper effect to the scheme of deferment of sales-tax launched by various State Governments. Later on, the Central Board of Direct Taxes has issued another Circular No. 674 dated 29-12-1993 clarifying therein that the deferral scheme notified by the State Government through the government orders would also meet the requirements of the Board Circular No. 496 dated 25-9-1987 though the aforesaid scheme was not brought by amending the Sales Tax Act. The Board has also clarified through this circular that the amount of sales-tax liability converted into the loans may be allowed as deduction in the assessment for the previous year in which such conversion has been permitted by or under the government orders.

If the amendments brought by the State Government in the MPGST Act, the scheme launched by the government for giving effect to the amendment and the aforesaid circulars issued by the Central Board of Direct Taxes are read together, only one and one inference would be drawn that they are inextricably connected with each other. None of them can be read in isolation. The contention of the assessee that Circular No. 674 dated 29-12-1993 should not be considered in those cases in which the deferment of sales-tax scheme was launched by the State Government by bringing an amendment in the Sales Tax Act, is not acceptable to us inasmuch as this was issued to overcome certain difficulties faced by the assessee and the department in given proper effect to the aforesaid schemes. A careful perusal of the relevant provisions of Sales Tax Act, scheme and the Board circulars would lead to any one inference that the deduction of deferment of sales-tax can only be allowed in the assessment for the previous year in which the sales-tax liability was converted into the loan liability and the necessary orders were issued by the competent authority in Form-D as per rule 3(2)(c) of scheme for conversion of deferred tax into loan. Until and unless the deferred sales-tax is converted into the final loan liability, the assessee is not entitled to claim deduction for the same in view of section 22(3B) of the MPGST Act and the aforesaid circulars issued by the CBDT. An eligibility certificate issued by the competent authority to the eligible unit for making the application in Form-A to the competent authority for the conversion into a provisional loan liability of the deferred tax as per rule (3)(1)(a) would not entitle the eligible unit to claim the deduction of deferment of sales-tax in view of the provisions of section 22(3B) and the aforesaid circular of the Central Board of Direct Taxes because before issuing a final conversion certificate the authorities concerned have to make detailed verification. We are, therefore, of the view that the deduction of deferment of sales-tax can only be claimed by the assessee after the order was passed by the competent authority in Form-D converting the amount of sales-tax assessed by the assessing officer representing the deferred tax into a final loan liability and the claim of deduction can only be raised in those previous years in which the deferred sales-tax was converted into a final loan liability.

Turning to the case in hand in the fight of foregoing discussion, we find that though the unambiguous scheme, circular issued by the Central Board of Direct Taxes and the amended provisions of Sales Tax Act were in force when the assessing officer has framed the assessment but the assessing officer did not examine the claim of the assessee in the light of the aforesaid legal provisions whether the assessee was entitled to the claim raised in its return of income. In the instant case, despite our specified queries with regard to the conversion certificate, nothing has been placed before us that the assessee has raised the claim of deduction of deferment of sales-tax after getting the deferred tax liability converted into a final loan liability as per rule 3(2)(c) of the aforesaid scheme. Since the assessing officer has allowed the claim of deduction of deferment of sales-tax though the assessee was not entitled to the same, the assessment order on this count is erroneous and prejudicial to the interests of the revenue. We have also carefully perused the various judgments referred to by the assessee in support of its claim that whenever the assessing officer has applied its mind and takes a particular view, his view cannot be revised by the Commissioner by resorting to the provision of section 263 of the Act. No doubt, it has been held by various High Courts that if two views are possible by construing a particular provisions of law and one view was adopted by the assessing officer, the same cannot by revised by the Commissioner though he did not agree with that view because he cannot thrust his wisdom upon the assessing officer. But it has never been held by any of the High Courts that is the assessing officer takes a view contrary to the existing provisions though after due application of mind, the Commissioner is debarred from resorting to section 263 of the Act for setting aside the order of the assessing officer. In the instant case, in the given facts and circumstances of the case, the assessee was not entitled to the claim of deduction on account of deferment of sales-tax in view of the existing provisions of law and the assessing officer has allowed the claim to the assessee even without making any discussion on this subject in its order. An oblique reference in a questionnaire issued to the assessee with regard to the impugned issue is not sufficient to say that the impugned issue has been examined by the assessing officer after application of mind in accordance with the existing provisions of law.

Keeping in view the totality to the facts and circumstances of the case in the light of the existing legal provisions, we are of the considered opinion that the Commissioner was justified in holding that the order of assessment on this count was erroneous and prejudicial to the interests of the revenue. We, therefore, uphold the order of the Commissioner.

ITA No. 1228/Ind./1996 : ln this appeal the assessee has raised various grounds but all the grounds relate to the setting aside of the assessment order by the Commissioner by invoking the provisions of section 263 of the Act by holding that the assessment order is erroneous and prejudicial to the interests of the revenue because the assessing officer had wrongly allowed the claim of deduction of deferment of sales-tax to the assessee.

An identical issue has already been adjudicated by us in the foregoing appeal and for the reasons discussed therein, we hold that the Commissioner was justified in holding that the assessment order is erroneous and prejudicial to the interests of the revenue. We, therefore, uphold the order of the Commissioner.


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