COMMISSIONER OF INCOME-TAX VS NOSHIRWAN & CO. (PVT.) LTD.
1999 P T D 2398
[227 I T R 914]
[Madhya Pradesh High Court (India)]
Before A.R. Tiwari and N. K. Jain, JJ
COMMISSIONER OF INCOME-TAX
Versus
NOSHIRWAN & CO. (PVT.) LTD.
Miscellaneous Civil Case No.593 of 1994, decided on 25/04/1996.
Income-tax---
----Business expenditure---Deduction only on actual payment---Law applicable---Effect of amendment of S.43-B with effect from 1-4-1988-- Addition of proviso stating that disallowance would not apply where payment was made before return was filed---Amendment was procedural and applied to pending proceedings---Indian Income Tax Act, 1961, S.43-B.
For the assessment year 1986-87, the Revenue Authorities had made a disallowance of Rs.1,59,360 by invoking the provisions of section 43-B of the Income Tax Act, 1961. The amount represented the sales tax collected in the last quarter. This was confirmed by the Commissioner of Income-tax (Appeals). The Tribunal directed the Assessing Officer to verify if the said amount had been paid by the assessee before the due date prescribed under section 139(1) for filing the return of income for the assessment year 1986-87, and, if the amount had been paid before the furnishing of the return of income to allow the same as deduction. On a reference:
Held, that the proviso inserted in section 43-B with effect from April, 1, 1988, was procedural in nature and its benefit was clearly available to the assessee. Hence, 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 under section 139(1).
D. D. Vyas for the Commissioner.
P.B.S. Nair for the Assessee.
JUDGMENT
A.R. TIWARI, J.--- At the instance of the Department, the Tribunal has stated the case and referred the under noted question of law arising out of the order, dated September 27, 1993, passed in I.T.A. No.880/Ind. of 1993 on rejection of the application registered as R.A. 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 under section 139(1) of the 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 43-B of the Income-tax Act, 1961. The said amount represented the sales tax collected in the last quarter. The Assessing Officer disallowed the claim under section 43-B 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 under section 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 under section 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 43-B 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 under section 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.
M.B.A./2056/FC
Reference answered.