1. The Income-tax Appellate Tribunal, Allahabad Bench, under Section 256(1) of the Income-tax Act, 1961, has stated a case and referred the following questions stated to be of law and to arise out of its order dated August 9, 1989, passed in I. T. A. No. 500 (All) of 1988 for the assessment year 1985-86 for the opinion of this court :
'1. Whether the Tribunal was right in holding that the jurisdiction under Section 263 was rightly and legally invoked by the Commissioner of Income-tax ?
2. Whether, on the facts and in the circumstances of the case and on a proper construction of Section 43B read with Explanation 2 as added by the Finance Act, 1989, the Appellate Tribunal was justified in holding that the said Explanation will apply retrospectively with effect from April 1, 1984 ?
3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the amount of sales tax which remained outstanding on the last day of the accounting year is to be added to the income of the assessee-firm ?'
2. The reference came up for hearing before a Division Bench of this court and by an order dated May 7, 1993, the Tribunal was directed to make a supplementary statement of the case clarifying whether the assessee had paid the disputed amount of tax before filing the return in terms of proviso to Section 43B. The proviso came into effect from April 1, 1988 and the question was whether it was retrospective in nature so as to apply to assessment year 1985-86. In the supplementary statement of the case, the Tribunal has stated that an amount of Rs. 3,21,172.23 was deposited by the assessee on April 30, 1984, i.e., before filing of the return while the amount in dispute was Rs. 3,22,791.
3. In Allied Motors (P.) Ltd. v. CIT : [1997]224ITR677(SC) , the Supreme Court held that the proviso is of a clarificatory nature for giving effect to the true intention of Section 43B and is, therefore, retrospective in operation. Learned standing counsel for the Commissioner concedes that the law now stands settled by the Supreme Court. The Supreme Court has also held in the said case that Explanation 2 as added by the Finance Act, 1989, was retrospective in nature. We, therefore, answer the questions as under :
4. With regard to question No. 1 we hold that the Tribunal was not right in holding that the Commissioner had rightly exercised jurisdiction under Section 263 in respect of a sum of Rs. 3,22,791 and we hold that the Commissioner could have exercised jurisdiction under Section 263 only in respect of a sum of Rs. 1,690.
5. We answer question No, 2 in the affirmative, i.e., against the assessee and in favour of the Commissioner.
6. We answer question No. 3 in the negative holding that the amount of Rs. 3,21,172 which had been paid by the assessee before filing its return of income for the assessment year 1985-86 could not be disallowed under Section 43B of the Income-tax Act, 1961. The questions are answered accordingly.
7. An authenticated copy of the judgment be transmitted to the Tribunal in accordance with law.