COMMISSIONER OF INCOME TAX Vs. MANSUKHLAL PRANJIBHAI

JUDGEMENT

(1.) The Tribunal, Nagpur Bench, Nagpur has referred the following questions for the opinion of this Court, as arising out of the order dt. 13th Feb., 1992 of the Tribunal in ITA No. 641/Nag/87, for the asst. yr. 1985-86 -

(2.) The respondent-assessee was a dealer in kirana and general goods, grains and other items. The assessee claimed the liability of Rs. 1,12,269 towards payment of mandi tax from the business profit during the accounting period relevant to the asst. yr. 1985-86. It was, however, not disputed that this amount was not paid but only provision for meeting the liability was made. The AO disallowed the claim in view of the provision of s. 43B of the IT Act, 1961. Against the order of the AO, an appeal was preferred to the CIT(A) which was allowed by him on the ground that the tax did not fall within the purview of s. 43B and deduction could be claimed since the accounts were maintained on mercantile basis. The Department filed an appeal against the decision of CIT(A) contending that liability could not be allowed in view of the provision of s. 43B of the Act, which was dismissed on the ground that there was distinction between tax and fee and since in the case of the assessee, it was fee and not tax, provisions of s. 43B were not applicable. The Department thus raised the above question for being referred under s. 256(1) of the Act and accordingly the said questions have been referred for the opinion of this Court.

(3.) We have heard the learned counsel for the parties and perused the record.