Case Law Details
Maruti Udyog Ltd. Vs. CIT (Delhi High Court)
Issue: Whether the ITAT has committed an error of law in upholding the dis allowance of Rs. 3,08,79,171 in respect of Sales Tax Recoverable account, under Section 43B of the Income Tax Act?
Held by Delhi High Court
The treatment of advance payment of sales tax, as far as Section 43B, is concerned is no different from the treatment of MODVAT credit under the excise law. It is not in dispute, therefore, that in principle the answer to question (ii) will govern question (iii) as well.
The facts are the Assessee pays sales-tax on the purchase of raw materials and computers used in the manufacture of cars. Though, the sales- tax paid is part of the cost of raw material, the Assessee debits the purchases net of sales-tax; the sales-tax paid is debited to a separate account titled ‘Sales-tax Recoverable A/c‟. Under the Haryana General Sales Tax Act 1973, the Assessee cold set off such sales-tax against its liability on the sales of the finished goods i.e. cars. Whenever the goods are sold, the tax on such sales is credited to the aforesaid account.
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