Gain on settlement of sales tax deferred liability not taxable

Advocate Akhilesh Kumar Sah

DCIT Vs Alfa Laval India Ltd. (ITAT Pune)

Alfa Laval India Ltd. case: Difference between the Net Present Value against the future liability credited by the assessee under the capital reserve account in its books of account, is a capital receipt, the addition made on account of the gain on settlement of the sales tax deferred liability not taxable

In DCIT vs. Alfa Laval India Ltd. [ITA No. 2638/PUN/2016 A.Y.: 2011-12, decided on 09.01.2019], one of the ground raised was whether on the facts and in the circumstances of the case, the CIT(A) was justified in holding that discount of Rs.72,74,168/- received on pre-payment of liability under the ‘Sales Tax Deferral Scheme’, as not a remission or cessation of liability under section 41(1) of the Income Tax Act, 1961 (for short ‘the Act’).

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