COMMISSIONER OF INCOME TAX Vs. KWALITY ICE CREAM

JUDGEMENT

(1.) IN this reference, relevant to the Assessment Year 1976 -77, the following question of law has been referred for our opinion under Section 256(1) of the Income Tax Act, 1961('Act'): Whether on the facts and in the circumstances of the case, the liability to pay the sales tax of Rs.4,24,029/ - made up of Rs.3,22,482/ - being refund of sales tax received by the assessed during the relevant year and Rs.1,01,507/ - being provision for sales tax made in the accounting period relevant to the assessment year 1976 -77, was chargeable to tax to the total income of the assessed?

(2.) IN so far as the first part of the question is concerned, whether the liability to pay sales tax of Rs.3,22,482/ - being refund of sales tax received by the assessed during the relevant year was chargeable to tax, learned Counsel for the parties are agreed that in view of the decision in Polyplex (India) Pvt. Limited v. Commissioner of Income Tax : [2002]257ITR343(SC) this part of the question is required to be answered in the affirmative, that is in favor of the Revenue and against the assessed.

(3.) THE Revenue was not satisfied with the decision rendered by this Court and preferred an appeal which remained pending before the Supreme Court. Ultimately it was decided by the Supreme Court on 6th September, 1995. It is common ground that the decision of the Supreme Court affirmed the decision of this Court that the assessed was not liable to pay sales tax on the ice cream sold by it.