Commissioner of Income Tax, Allahabad vs Allahabad Automobiles (P.) Ltd.

The income tax Appellate Tribunal, Allahabad, has referred the following two questions of law u/s 256(1) of the income tax Act, 1961 (hereinafter referred to as ''the Act''), for opinion to this Court :

"1. Whether, on the facts and circumstances of the case, the Tribunal was justified to allow the deduction after the close of the previous year which was not permissible in view of the provisions as laid down in section 43B of the income tax Act ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the provisions of section 43B of the income tax Act, 1961 did not apply to the amount of sales tax realised by the assessee and paid to the department within the period permissible under the provision of the Sales Tax Act ?"

The present reference relates to the assessment year 1988-89.

During the assessment year in question, the respondent had realised a sum of Rs. 88,776.81 towards the sales tax from its customers, which was payable up to 31-8-1987, the previous year relevant to the assessment year in question ended on 31-7-1987. It was paid over within the statutory period. The income tax Officer had added the said amount by invoking the provisions of section 43B of the Act. In appeal the Commissioner of income tax (Appeals) has deleted the addition, which order has been upheld by the Tribunal.

We have heard Sri R.K. Upadhyaya, learned standing counsel for the revenue, Sri S.K. Gupta has filed his appearance on behalf of the respondent-assessee. In view of the decision of the Apex Court in the case of Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677 1, the amount of sales tax which has been realised in one year paid over to the Sales Tax Department within the statutory period in the subsequent year cannot be added in the income of the assessee invoking the provisions of section 43B of the Act. We, accordingly, answer both the questions referred to us in the affirmative, i.e., in favour of the assessee and against the revenue. However, there shall be no order as to costs.