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Commissioner of Income Tax v/s M/s. Pearl Food Products


Company & Directors' Information:- B. P. FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15311MP1994PTC032994

Company & Directors' Information:- S P P FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15412DL2004PTC128666

Company & Directors' Information:- J S FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15314OR1991PTC002964

Company & Directors' Information:- H R B FOOD PRODUCTS PVT LTD [Active] CIN = U15146WB1988PTC045281

Company & Directors' Information:- V D FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15400DL2012PTC231717

Company & Directors' Information:- P R FOOD PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U74899DL1989PTC030483

Company & Directors' Information:- S S FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15310MH2003PTC142530

Company & Directors' Information:- B K FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15312OR1996PTC004541

Company & Directors' Information:- O H P FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U52205DL1999PTC100269

Company & Directors' Information:- K V FOOD PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U15122DL2007PTC162739

Company & Directors' Information:- K. C. FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15431JK1982PTC000554

Company & Directors' Information:- K I C FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15316DL1979PTC009757

Company & Directors' Information:- PEARL PRODUCTS COMPANY PRIVATE LIMITED [Active] CIN = U24110MH1964PTC012816

Company & Directors' Information:- R B FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15313DL2010PTC202753

Company & Directors' Information:- PEARL LIMITED [Strike Off] CIN = U74899DL1985PLC035536

Company & Directors' Information:- R K B FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15490KL2013PTC033500

Company & Directors' Information:- S K G FOOD PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U15419UP1991PTC013771

Company & Directors' Information:- B H FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15134DL1997PTC084273

Company & Directors' Information:- N S FOOD PRODUCTS PVT LTD [Strike Off] CIN = U15412WB1992PTC055591

Company & Directors' Information:- H N FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15146UP1990PTC011540

Company & Directors' Information:- V K FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15412UP1988PTC010023

Company & Directors' Information:- PEARL CO PVT LTD [Active] CIN = U65999WB1929PTC006333

Company & Directors' Information:- PEARL INDIA PRIVATE LIMITED [Strike Off] CIN = U17212DL1998PTC097356

Company & Directors' Information:- B M FOOD PRODUCTS PVT LTD [Strike Off] CIN = U15419WB1993PTC060386

Company & Directors' Information:- I K FOOD PRODUCTS PVT LTD [Strike Off] CIN = U15412WB1991PTC051852

Company & Directors' Information:- S S V FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15499AP1982PTC003547

Company & Directors' Information:- S Q P FOOD PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U15100MH2003PTC139217

Company & Directors' Information:- F S FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15311MH2000PTC126031

Company & Directors' Information:- Z K FOOD PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U15400MH2010PTC209818

Company & Directors' Information:- M B S FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U01112WB2003PTC096375

Company & Directors' Information:- N D FOOD PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U15131DL2002PTC115754

Company & Directors' Information:- C K M FOOD PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U51909KL1998PTC012358

Company & Directors' Information:- G S C FOOD PRODUCTS PVT LTD [Strike Off] CIN = U15316WB1985PTC038398

Company & Directors' Information:- A K G FOOD PRODUCTS PVT LTD [Under Liquidation] CIN = U15412WB1990PTC049789

Company & Directors' Information:- J M D FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15419DL1998PTC097578

Company & Directors' Information:- L K FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15200TG2016PTC103411

Company & Directors' Information:- FOOD PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U15431JK1966PTC000304

Company & Directors' Information:- R R FOOD PRODUCTS PRIVATE LIMITED [Active] CIN = U15490PN2015PTC154753

Company & Directors' Information:- A N FOOD PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U15400TG2013PTC091969

Company & Directors' Information:- R V S K FOOD PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U15490DL2012PTC245851

Company & Directors' Information:- K G Y FOOD PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U15400KA1984PTC005909

Company & Directors' Information:- FOOD PRODUCTS (INDIA) PVT. LTD. [Strike Off] CIN = U15311HR1994PTC032356

Company & Directors' Information:- M K FOOD PRODUCTS PVT LTD [Strike Off] CIN = U15209DL1979PTC009924

    I.T.A.No.1572 of 2009

    Decided On, 22 November 2011

    At, High Court of Kerala

    By, THE HONOURABLE MR. JUSTICE C.N. RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K. VINOD CHANDRAN

    For the Appellant: P.K.R. Menon, Jose Joseph, Advocates. For the Respondent: A. Kumar, Advocate.



Judgment Text

C. N. Ramachandran Nair, J.

1. This is an appeal filed by the revenue challenging the order of the Income Tax Appellate Tribunal upholding the respondent’s eligibility for deduction of sales tax which was not paid in the previous year or until the last date as required under S.43(B) of the Income Tax Act (for short IT Act).

2. We have heard Sri. P. K. R. Menon for the appellant and Sri. A. Kumar for the respondent. The issue arose in the year 1991-92. Admittedly, respondent - assessee did not remit the sales tax before the closing of the previous year or until the date of filing of the return for the relevant assessment year. So much so, in the normal course assessee was not entitled for deduction of the accrued sales tax liability by virtue of S.43B of the IT Act which entitles for deduction only if payment is made on or before the due date provided thereunder. However, assessee still claimed deduction because being a sick industry the assessee was entitled to the benefit conferred by a notification by which State Government gave a moratorium for payment of arrears of tax by sick industries wherein payment was to be made after a period of two years in 12 equal monthly instalments with the rate of interest @12% per annum. The assessee put forward the claim that S.43B does not stand in the way of entitlement for deduction by virtue of Circular No. 674 1994 (205) ITR (St.)119. Paragraph 16 of the said Circular provides for deduction in cases where tax liability is converted into loan by the department. The relevant provisions of the notification relied on by the assessee as extracted in the decision of the Hon’ble High Court of Rajasthan reported in CIT v. Ravindra Platinum (P) Ltd., 2008 (175) Taxman 46 is as follows:

'The Board have considered the matter and are of the opinion that such deferral schemes notified by the State Governments through Government orders meet the requirements of the Board’s Circular No. 496, dated 25/09/1987 (see 1988 (169) ITR (St). 53), in effect though in a different form. Accordingly, the Board have decided that the amount of sales tax liability converted into 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.'

3. While the claim of the Revenue is that the case of the respondent - assessee is not covered by the circular, assessee’s case is that the scheme of repayment under the Government Orders has the effect of treatment of the tax arrears as loan due to Government.

4. After hearing both sides, we are of the view that there is no scope for interference with the findings of the Tribunal for more than one reason. In the first place the Tribunal on facts found that the scheme of deferred payment provided by the State Government to the respondent assessee amounts to a loan. Secondly, what we notice is that under the scheme of moratorium, the strict provisions of the statute particularly the default interest payable under S.23(3) is modified under the deferred payment scheme, inasmuch as against the payment of interest at 24% per annum after the first three months of the default, interest provided under the deferred payment scheme by the State Government is only 12% per annum. In fact, under the Sales Tax Act only the Assessing Officer enjoys the powers for granting time for payment, that too by collecting the default interest under the statutory provisions. On the other hand, under the scheme relied on by the respondent, it is applicable only to sick industries and that too on payment of annual interest @ 12% which is lower than the statutory rate. Further payment starts after a period of two years. In fact if the assessee commits default of repayment, recovery has to be of the amount d

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ue under the deferred payment scheme. The assessee also had made payment in terms of deferred scheme. We therefor on the facts hold that the transaction is a loan by the State Government whereby the tax liability was converted under the deferred scheme as a loan. Accordingly we uphold the order of the Tribunal and dismiss revenue’s appeal though not for the reasons stated by the Tribunal but for the reason stated above.
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