MWP LTD. Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The challenge in these appeals is against the common order dated 5th April, 2005 passed by the High Court of Karnataka in the exercise of its reference jurisdiction (as it then existed) answering the questions referred to it against the Assessee and in reversal of the conclusions of the Appellate Commissioner and the Income Tax Appellate Tribunal. The assessment years in question are 1982-83, 1984-85 and 1985-86 respectively. The issue before the High Court was with regard to the entitlement of the Appellant-Assessee to the benefit of the deduction of the amount of liability to payment of sales tax on the excise duty component of the goods purchased by the Assessee from the manufacturer-seller-M/S. Mc Dowell & Co. Ltd. The facts noticed are those arising in the appeal for the assessment year 1982-1983 though the same would suffice for the other appeals also. There is no dispute that in terms of the Agreement between the buyer and seller, the Appellant-Assessee had directly deposited the excise duty payable on the goods and had claimed and received the deductions under the said head. It is also not in dispute that the Assessee has been granted the benefit of other components of the sale price. The manufacturer - M/s. Mc Dowell & Co. Ltd., did not include the excise duty element in its turn over as the same was directly paid by the buyer and had denied its liability to pay sales tax on the said component. The claim of M/s. Mc Dowell & Co. Ltd. was, however, negatived by all forums including this Court. Having been found to be liable for payment of sales tax on the excise duty component, M/s. Mc Dowell & Co. Ltd. had raised a demand upon the Assessee for the same and the Assessee accordingly filed revised return for the assessment year in question.

(2.) The assessing officer refused the benefit of deduction which, however, was granted by the Appellate Commissioner before whom for the first time an agreement dated 18.12.1981 by and between the Assessee and M/s. Mc Dowell & Co. Ltd. was produced. Clause 8 of the Agreement which is relevant to the present controversy is being extracted hereunder:

(3.) The aforesaid view of the Appellate Commissioner was affirmed by the Tribunal in an appeal filed by the Revenue. Aggrieved, a reference was sought and obtained by the Revenue which having been answered in the manner indicated above, the Assessee is before us in the present appeals.