Premature payment of deferred sales tax and on such payment entire liability to pay tax stood discharged, section 41(1) was not applicable

IT : Where assessee due to certain scheme made premature payment of deferred sales tax and on such payment entire liability to pay tax stood discharged, section 41(1) was not applicable
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[2014] 52 taxmann.com 15 (Karnataka)
HIGH COURT OF KARNATAKA
Commissioner of Income-tax, Central Circle, Bangalore
v.
McDowell & Co. Ltd.*
N. KUMAR AND MRS. RATHNAKALA, JJ.
IT APPEAL NO. 899 OF 2008†
SEPTEMBER  2, 2014
Section 41(1), read with section 43B, of the Income-tax Act, 1961 read with section 38 of the Bombay Sales Tax Act, 1959 - Remission or cessation of trading liability (Sales Tax) - Assessment year 2004-05 - Assessee was allowed to retain sales tax and pay same 15 years thereafter according to deferral scheme - However, by a subsequent scheme, a provision was made for premature payment of an amount equal to net present value of deferred tax and on such payment balance amount of deferred tax would be waived - Assessee paid net present value and did not offer remaining amount for tax - Revenue relied on section 41(1) to levy tax on remaining amount - Whether where assessee made premature payment and on such payment entire liability to pay tax stood discharged, section 41(1) was not applicable to assessee - Held, yes [Para 12] [In favour of assessee]
Circulars and Notification : CBDT Circular No. 496, dated 25-9-1987 and No. 612, dated 29-12-1993