SALES TAX LIABILITY CONVERTED INTO LOAN UNDER STATE GOVT. SCHEME COULD NOT BE DISALLOWED U/S 43B

The Board made it clear that if the sales tax due to the Government was converted into a loan which may be repaid by the assessee subsequently in installments, the Department shall treat the sales tax
dues as actually paid for all purposes. Both the appellate authorities, namely The Commissioner (Appeals) as well as the Tribunal had found that the certificate produced by the assessee during the course of appellate proceedings before the Commissioner (Appeals) certified that the sales tax amount collected by the assessee during the period from 1985 to 1990 was converted into a loan. Hence, the Tribunal was right in law and on the facts in upholding the view taken by the Commissioner (Appeals) deleting the addition made under section 43B.