COMMISSIONER OF INCOME TAX Vs. S AYYADURAI

JUDGEMENT

(1.) AT the instance of the Revenue, the Tribunal, Madras Bench 'B', Madras, has stated a case and referred the following questions of law under s. 256(2) of the IT Act, 1961, for our opinion:

(2.) THE assessee is an individual and during the course of the assessment proceedings for the asst. yr. 1974 -75, the assessee claimed a deduction for a sum of Rs. 36, 377 for the sales -tax payment in the computation of the business income. The ITO held that the claim was not admissible as this Court, in assessee's own case under the provisions of the Tamil Nadu General Sales -tax Act, relating to the accounting year 1967 -68 in T.C. No. 154 of 1971, dt. 3rd March, 1976, held that the act of forwarding the gift articles in a circulation scheme adopted by the assessee to successful subscribers was not a sale since the element of sale was not present and as such there was on liability under the provisions of the Tamil Nadu General Sales -tax Act

(3.) THE assessee preferred an appeal before the CIT(A) who confirmed the order made by the ITO. Aggrieved, the assessee filed an appeal before the Tribunal, Madras Bench 'B', Madras, and the Tribunal held that it was incurred to state that the sales -tax demand for that year had ceased, as the matter was pending before the Supreme Court. The Tribunal held that the liability was subsisting on the last day of the accounting year, the assessee would be entitled to the deduction of sales -tax liability to the extent of Rs. 36.337. The Tribunal also held that if there is a refund or remission of sales -tax it would attract s. 41(1) of the IT Act