Commissioner of Income Tax vs Noshirwan and Co. Pvt. Ltd.

A.R. Tiwari, J.—At the instance of the Department, the Tribunal has stated the case and referred the undernoted question of law arising out of the order dated September 27,1993, passed in ITA No. 880/Ind. of 1993 on rejection of the application registered as RA No. 321/Ind. of 1993 for the assessment year 1986-87, for our consideration and opinion :

" Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law in holding that the deduction should be allowed for the amount of the sales tax, which has been paid before the date prescribed for filing of the return u/s 139(1) of Income Tax Act, 1961 ?"

Briefly stated, the facts of the case are that the Revenue authorities had made a disallowance of Rs. 1,59,360 by invoking the provisions of Section 43B of the Income Tax Act, 1961. The said amount represented the sales tax collected in the last quarter. The Assessing Officer disallowed the claim u/s 43B and added the said amount to the total income of the assessee-company. The addition was confirmed by the Commissioner of Income Tax (Appeals). The Tribunal directed the Assessing Officer to verify if the said amount has been paid by the assessee before the due date prescribed u/s 139(1) for filing the return of income for the assessment year 1986-87 and if the amount has been paid before furnishing of the return of income to allow the same as deduction.

We have heard Shri D.D. Vyas, learned counsel for the applicant, and Shri P.B.S. Nair, learned counsel for the non-applicant.

We find that the Tribunal concluded as under :

"The said amount relates to the last quarter of sales-tax. The Assessing Officer is directed to verify if the said amount has been paid by the assessee before the due date prescribed u/s 139(1) for filing the return of income for the assessment year 1986-87. If the amount has been paid within that time, it shall be deleted and care shall be taken that in case the deduction of the said amount has been allowed in the succeeding assessment year on the basis of actual payment, the same shall be withdrawn."

Counsel for the applicant very frankly brought to our notice that similar question in other miscellaneous civil cases has been answered by this court in favour of the assessee and against the Department thereby sustaining the order passed by the Tribunal. Section 43B is held to be retrospective.

No new ground is urged to persuade us to take a different view in the matter.

We have perused the statement of the case and considered the question as presented and projected. We conclude, that in the facts and circumstances of the case, the Tribunal was justified in directing the Assessing Officer to allow the deduction if the sales tax payment had been made before furnishing the return of income u/s 139(1) even when the proviso was effective from April 1, 1988, and that for the earlier years, the benefit of the proviso, procedural in nature, was clearly available to the assessee. The Tribunal has committed no error in dismissing the appeal of the Department.

In the result, we answer the question in the affirmative, i.e., in favour of the assessee and against the Department.

We, however, make no orders as to costs. Counsel fee for each side is fixed at Rs. 750, if certified.

A copy of this order shall be transmitted to the Tribunal.