Travancore Cements Ltd. vs Commissioner of Income Tax

Paripoornan, J.—The petitioner-company is an assessee to Income Tax. The respondent is the Revenue. We are concerned with the assessment year 1977-78. The assessee received refund of sales tax amounting to Rs. 72,535 during the previous year ended on December 31, 1976, relevant to the assessment year 1977-78. After deducting the amounts returned by the assessee to its customers, the balance was fixed at Rs. 59,772. This amount was brought to tax u/s 41(1) of the Income Tax Act. The assessee pleaded that the provisions of Section 41(1) of the Act will not apply. This plea was negatived by the assessing authority, the Appellate Assistant Commissioner and by the Appellate Tribunal. The Appellate Tribunal found that an identical plea, on substantially similar facts, was negatived by a Bench of this court in Commissioner of Income Tax Vs. Marikar (Motors) Ltd., . Based on the above decision, the Appellate Tribunal held that the matter stands concluded by the decision of this court in Commissioner of Income Tax Vs. Marikar (Motors) Ltd., , and so the sales tax refund amount can be brought to tax u/s 41(1) of the Income Tax Act. Aggrieved by the appellate order passed by the Tribunal dated February 13, 1985, the petitioner filed an application u/s 256(1) of the Income Tax Act praying that the questions formulated in para 5 of the original petition may be referred to this court for decision. The Appellate Tribunal, by order dated October 12, 1987, rejected the said application. Thereafter, the assessee has filed this original petition u/s 256(2) of the Income Tax Act.

We heard counsel for the petitioner/assessee, Mr. Pathrose Mathai, as also counsel for the Revenue, Mr. P. K. R. Menon. We were taken through the Bench decision of this court in Commissioner of Income Tax Vs. Marikar (Motors) Ltd., . On a perusal of the said decision, it is evident that in almost similar circumstances, a Bench of this court has held that the sales tax refund amount can be brought to tax u/s 41(1) of the Income Tax Act. In that case also, the payment to the sales tax department was not debited to the profit and loss account. The sales tax amount collected by the assessee from the customers was credited to a separate account as in this case. Even so, a Bench of this court held that the refund of sales tax received in the accounting year is income of the year in which it was received. Section 41(1) of the Income Tax Act was held to be applicable. In the light of the Bench decision of this court in Commissioner of Income Tax Vs. Marikar (Motors) Ltd., , we are of the view that no referable question of law, as formulated in para 5 of the original petition, arises for consideration. We are further of the view that the decision of this court in Commissioner of Income Tax Vs. Marikar (Motors) Ltd., , is substantially in accord with the earlier Bench decision of the Gujarat High Court in Motilal Ambaidas v. CIT [1977] 108 ITR 136.

The original petition is without merit. It is dismissed.