Shanker Vilas vs Commercial Tax Officer-III, Guntur

Y.V. Anjaneyulu, J.—The petitioner seeks a declaration that clause (b) of Notification II appended to G.O.Ms. No. 1025, Revenue Department, dated 22nd August, 1986 is ultra vires of the A.P. General Sales Tax Act, 1957 and Act 18 of 1985 and section 6 of the Constitution (46th Amendment) Act, 1982 and to strike down the same. The petitioner also seeks the quashing of the order of the Commercial Tax Officer-III, Guntur, respondent No. 1 herein, bearing No. 1409/86-A4 dated 27th October, 1986.

An identical question arose for consideration in Writ Petition No. 3242 of 1987 Nadimane Hotel (Pvt.) Ltd. Vs. Government of Andhra Pradesh, before a Division Bench of this Court to which one of us (Anjaneyulu, J.) was a party. The matter has been dealt with at length in that case. We do not, therefore, consider it necessary to cover the issues under consideration once again.

The petitioner''s contention is that in view of the Commercial Tax Department asserting its claim for payment of sales tax in respect of restaurant sales a provision was made in the books in respect of sales during the years 1980-81 and 1982-83 and deduction was claimed in the corresponding Income Tax assessments of the petitioner. The petitioner contends that the provision made in the books with reference to which claim for deduction was made in the Income Tax assessment should not affect the petitioner''s right to claim that the restaurant sales are not liable to be taxed pursuant to G.O.Ms. No. 1025 dated 22nd August, 1986.

There is force in the contention of the learned counsel for the petitioner. There is statutory safeguard that any liability ceasing shall be deemed to be the income of the assessee u/s 41 of the Income Tax Act. In the circumstances it is perfectly in order for the petitioner to offer the sales tax liability allowed in the Income Tax assessment as income u/s 41 of the Income Tax Act. Once that is done the requirements of G.O.Ms. No. 1025 dated 22nd August, 1986 and the notifications appended thereto are fully complied with.

In view of the above, we direct the petitioner to file an affidavit before respondent No. 1 stating that whatever liability is allowed in the petitioner''s Income Tax assessment for the corresponding years will be offered for assessment u/s 41 of the Income Tax Act as liability ceasing pursuant to the grant of exemption by the Commercial Tax Department. On the filing of such affidavit by the petitioner, respondent No. 1 is directed to revise the assessment already made by exempting the relevant sales in terms of G.O.Ms. No. 1025 dated 22nd August, 1986.

A copy of this order shall be endorsed to the Commissioner of Income Tax, A.P., Hyderabad, who will communicate the same to the concerned Income Tax Officer for the purpose of ensuring the assessment of the sum u/s 41 of the Income Tax Act in the relevant assessment of the petitioner.

The writ petition is disposed of with the aforesaid directions. No costs. Government Pleader''s fee Rs. 250.

Writ petition disposed of accordingly.