Commissioner of Income Tax vs Raghavji Veerji and Others

A.K. Mathur, C.J.—All these seven similar matters have been referred to the Full Bench of this court on account of conflicting decisions of the main seat at Jabalpur and of the Indore Bench in the cases of Commissioner of Income Tax Vs. Sumermal Gopichand, (M.C.C. No. 564 of 1991, decided on 15-4-1996), (by main seat at Jabalpur) and Commissioner of Income Tax Vs. Shree Tea Co. and Others, and Commissioner of Income Tax Vs. Satpal Vijay Kumar and Others, (decided by the Indore Bench).

It has been brought to our notice that recently the Supreme Court has resolved the controversy in the case of Allied Motors (P.) Ltd. Vs. Commissioner of Income Tax, Delhi, . It has been held as under (headnote) :

"Section 43B(a), the first proviso to Section 43B and Explanation 2 have to be read together as giving effect to the true intention of Section 43B. Explanation 2, being retrospective, the first proviso has also to be so construed. Without the first proviso, Explanation 2 would not obviate the hardship or the unintended consequences of Section 43B. The proviso supplies an obvious omission. But for this proviso the ambit of Section 43B becomes unduly wide bringing within its scope those payments which were not intended to be prohibited from the category of permissible deductions. The first proviso to Section 43B, therefore, has to be treated as retrospective."

Since their Lordships of the Supreme Court have already taken the view that the first proviso to Section 43B is retrospective in effect, all the seven references are answered in favour of the assessee and against the Revenue. These cases may be treated to have been disposed of and need not be sent to the Division Bench.