V.V. Kamat, J.
1. The assessment year in both these references is 1984-85. Although the amounts involved are different, the answer which the Revenue expects by these references is in identical terms and is reproduced hereinafter ;
' Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that Section 43B of the Income-tax Act, 1961, is not applicable to the assessee's case and the amount of Rs. 51,298 could not be brought to tax in the assessment year under consideration ?'
2. It would be at once seen that except for the situation that in Income-tax Reference No. 141 of 1987 the amount is Rs. 51,298 and in Income-tax Reference No. 142 of 1987 the amount is Rs. 18,086, there is no difference. The question is as to whether the amounts in question could be brought to tax in the assessment year (1984-85) under consideration, by application of the provisions of Section 43B of the Income-tax Act, 1961, as amended up to date, specially with regard to the assessment year in question. There is no doubt that the position of law as it stood at the time when the authorities considered the question was controlled by the provisions of Section 43B of the Act as it stood then. The position was that what was required for treating the amounts as income liable to taxation, not only should the liability to pay the tax or duty to be incurred in the accounting year in question, but it was further necessary that the amount should be statutorily payable in the accounting year itself.
3. However, the amendments introduced to the provisions of Section 43B of the Act by the Direct Tax Laws (Amendment) Act, 1987, the Finance Act, 1988, and the Finance Act, 1989, changed the situation with regard to the contents of the provisions of Section 43B of the Act. The Finance Act, 1989, relating to the amendment made in 1989 by its second proviso to Section 43B came to be substituted and it took effect from April 1, 1989. Explanation 2 also came to be amended by the said amendment--the Finance Act, 1989 (introducing a deeming provision that the said Explanation 2 will have to be deemed to have been inserted with effect from April 1, 1984).
4. In such a situation as the assessment year in question in these references is 1984-85, the legal consequence of the deeming provision with reference to Explanation 2 having been brought on record in pursuance of the Finance Act, 1989, would put the situation beyond the pale of any controversy or discussion in regard thereto. The situation becomes clearer on a bare reading of Explanation 2 to Section 43B of the Act which is statutorily and legally on the statute book on and from April 1, 1984. It would be more than appropriate to reproduce the said Explanation 2 which is as follows :
' For the purposes of Clause (a) as in force at all material times, 'any sum payable' means a sum for which the assessee incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law.'
5. It would thus be clear that even if the concerned amount might not have been payable within the year in question under the relevant taxation law, it would have to be understood as 'any sum payable' in the context. If this is the position that emerges as a result of the deeming provision arising out of the Finance Act, 1989, with regard to Explanation 2 to Section 43B of the Act, the obvious result would be that the provisions of Section 43B of the Act would become operative where the liability to pay the tax or the duty was incurred in the accounting year in question, for which the payment was collected and the amount was actually paid by the assessee, even in a situation that such amount might not have been payable on or before the last date of the accounting year or the accounting period.
6. If this is the situation as is clearly available from the provisions of the Finance Act, 1989, seeking to amend Explanation 2 deeming it to be effective on and from April 1, 1984, the assessees would not be entitled to any deduction because the amounts would certainly have to be understood as income taxable for the accounting year in question.
7. It may be that as and when the amount of sales tax collected is remitted by them in their capacity as the agent of the Government, the consequences of such payment in the accounting year in question would follow and also the assessees can be considered for refund of the tax paid in the accounting year in question.
8. Not only that the statutory provisions discussed above are crystal clear, the question also came up for consideration before this court in CIT v. Govindaraja Reddiar : [1991]187ITR417(Ker) , and it was also decided in the same way. This court also referred to the memorandum explaining the provisions in the Finance Bill, 1989 (see [1989] 176 ITR 123). The said memorandum speaks of the legislative intent being against the interpretation revolving around the use of the words 'any sum payable' to be the amount payable in a particular year also requiring it to be statutorily payable under the relevant statute in the same year also creating a need of a clarificatory amendment to mean a liability incurred by the taxpayer, may be during the previous year irrespective of the date by which such sum is statutorily payable. On the basis of the situation that courts of co-ordinate jurisdiction bind each other, the position of law becomes more clear apart from the contents of the statutory provisions referred to above.
9. However, we do not feel that any remand is necessary when not only has this court already pronounced thereupon, but the statutory provisions referred to hereinbefore by us also settle the question with regard to the liability of the assessees in these references. It is also necessary to observe that the memorandum also emphasised that the new proviso has been placed on the statute as stated in the said memorandum to remove the hardship caused to certain taxpayers who had represented that since the sales tax for the last quarter cannot be paid within that previous year, the original provisions of Section 43B will unnecessarily involve disallowance of the payment for the last quarter.
10. In view of the above discussion, the question is answered in the negative, in favour of the Revenue and against the assessee in both the references.
11. A copy of this judgment under the seal of the court and the signature of the Registrar shall be forwarded to the Income-tax Appellate Tribunal, Cochin Bench, as required by law.