COMMISSIONER OF INCOME TAX Vs. P.C. INDUSTRIES

JUDGEMENT

(1.) The Tribunal, Delhi has referred the following question of law under s. 256(1) of the IT Act, 1961 (hereinafter referred to as 'the Act') for opinion to this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the first proviso below the asst. yr. 1984 -85 onwards thereby allowing claim of deduction of sales -tax liability amounting to Rs. 47,923 paid

(2.) THE reference relates to the asst. yr. 1984 -85.

(3.) BRIEFLY stated, the facts giving rise to the present reference are as follows : During the course of the assessment proceeding, the assessing authority noticed that a sum of Rs. 47,923 was found payable on account of sales -tax which was appearing in the balance sheet as at Dussehra, 1983 relevant to the asst. yr. 1984 -85. In other words, the sales -tax has been collected by the respondent -assessee from its customers but was not paid to the Government. The AO held it as a trading receipt in view of the provisions of s. 43B, which was inserted w.e.f. the close of the accounting period ended on Dussehra, 1983. The order was upheld in appeal. However, in further appeal before the Tribunal, the Tribunal interpreting this provision of s. 43B of the Act, held that even if the payment of tax liability was actually made beyond the end of the accounting period but before the expiry of time allowed under the relevant sales -tax laws of the State, it was allowable as a deduction. It also took note of the Expln. II which was inserted of the return the amount of tax is paid, the liability to pay tax is discharged, then the provisions of cl. (a) would not be applicable. In the present case the Tribunal has found that the due date applicable for furnishing the return of income decision of the Delhi High Court in the case of Sanghi Motors vs. Union of India & Ors. (1991) 91 CTR (Del) 15 : (1991) 187 ITR 703 (Del), has taken the view that this proviso is prospective in nature and it is applicable from the asst. yr. 1988 -89 onwards. The Tribunal, therefore, allowed the claim.