COMMISSIONER OF INCOME TAX Vs. ISHWARDAS SONS

JUDGEMENT

(1.) Heard Standing Counsel for the appellant-Revenue and Adv. Sri P. Balakrishnan, appearing for the respondent-assessee. The question raised is whether the Tribunal was justified in cancelling assessment of Rs. 25,27,734 being the refund of turnover tax assessed by the department during the previous year relevant for the assessment year 1995-96. Standing Counsel submitted that turnover tax paid by the assessee was allowed as deduction in the assessments during the preceding assessment years 1990-91, 1991-92 and 1992-93 and therefore, when refund is received in the relevant assessment year 1995-96, it is income assessable under Section 41(1) of the Income-tax Act. Counsel appearing for the assessee on the other hand produced copy of judgment in IT Appeal No. 232/2002 in assessee's own case whereunder this Court held that the turnover tax recovered by the assessee and retained as a contingency deposit in their account is that income assessable at their hands. Based on this judgment, the contention of the counsel for the assessee is that the very same income got assessed in the year in which it is recovered from the principals. We do not think the assessment of this income in the hands of the assessee stands in the way of assessment of refund of tax under Section 41(1). If in any subsequent assessment year after 1988-89 the assessee claimed deduction of turnover tax on payment basis under Section 43B and later got refund by virtue of exemption allowed in appeal, the amount is assessable under Section 41(1) in the year in which refund is received. From the orders of the Tribunal we find that the assessee has not disputed the deduction allowed to it on payment of turnover tax during the assessment years 1990-91,1991 -92 and 1992-93 as stated by the Assessing Officer. However, the Tribunal has proceeded to allow the appeal by holding that by virtue of decision of this Court in another party's case, the refund order has not become final and so much so, it is not income of the assessee. We are unable to uphold this reasoning of the Tribunal because assessee itself does not have a case that the department has filed a further appeal or claimed return of the refund amount even at the time the matter was heard by the Tribunal. Therefore, the reason stated by the Tribunal is absolutely untenable. We, therefore, allow the appeal by reversing the order of the Tribunal and restoring the assessment. However, if the assessee has not claimed deduction of the turnover tax on payment basis under Section 43B for 1990-91,1991 -92 and 1992-93 as stated in the order, then certainly there is no case for assessment of refund because if the amount happened to be assessed as its income for any earlier year, repeated assessment is not called for on refund of the tax after payment by the respondent. In other words, if deduction of turnover tax paid was allowed in the assessment for any year prior to the year in which refund is issued, then the refund amount is assessable in the year in which it is received by virtue of operation of Section 41(1) of the Act. However, it will be open to the assessee to produce evidence that no deduction is claimed for payment of turnover tax for the assessment years 1990-91,1991-92 and 1992-93 as stated in the assessment order and if the same is found to be a mistake, the Assessing Officer will exclude the amount from assessment by rectifying the order.