K.A. Puj, J.
1. In this reference, at the instance of the applicant-Revenue, the following question of law is referred to for the opinion of this court for the assessment year 1984-85 :
'Whether, the Appellate Tribunal is right in law and facts in deleting the addition of Rs. 1,01,81,278 made by the Income-tax Officer under Section 43B in respect of outstanding sales tax amount when the resolution of the Government was passed on December 14, 1984, and the assessee had not discharged its liability on March 31, 1984, i.e., prior to the date of resolution ?'
In this reference, the only dispute is about disallowance under Section 43B for unpaid sum of Rs. 1,01,81,278 for sales tax. It is the stand of the assessee before the assessing authority that the State Government had allowed the assessee to return sales tax collected as a sort of incentive provided for the growth of industry. On this basis, it was contended by the assessee that its case was covered by the provisions contained in Section 43B of the Income-tax Act. The Income-tax Officer has, however, rejected the assessee's claim.
2. Being aggrieved by the said order of the Income-tax Officer, the assessee has preferred an appeal before the Commissioner of Income-tax (Appeals) and while disposing of the said appeal, the Commissioner of Income-tax (Appeals) has taken note of Circular No. 496, dated May 29, 1987 (see [1988] 169 ITR 53), issued by the Central Board of Direct Taxes and Gujarat Ordinance No. 1 of 1988, dated March 24, 1988 (see [1988] 69 STC 69), and on the basis of the said circular, the Commissioner of Income-tax (Appeals) has allowed the appeal of the assessee. Thereafter, in appeal filed by the Revenue before the Tribunal, a view was taken by the Tribunal on the basis of the circular issued by the Central Board of Direct Taxes as well as the resolutions of the State Government as referred to above, that the requirements for getting exemption from the mischief of Section 43B in respect of the Sales Tax Deferment Scheme of the Gujarat Government are satisfied. The Tribunal, therefore, held that the amount of Rs. 1,01,81,278 of deferred sales tax is not caught by the mischief of Section 43B of the Act.
3. Being aggrieved by the aforesaid decision of the Tribunal, the Revenue has come in reference before this court and the above question was referred for the opinion of this court.
4. Heard Mr. Tanvish Bhatt, learned standing counsel appearing for the applicant-Revenue. Nobody appears on behalf of the respondent-assessee though the notice was duly served. At the time of hearing of this reference, our attention is drawn to the decision of the Supreme Court in the case of CIT v. Gujarat Polycrete Pvt. Ltd. : [2000]246ITR463(SC) , wherein it is held that the Central Board of Direct Taxes circular, dated September 25, 1987, would apply only if a State would have amended its Sales Tax Act to provide that the sales tax that was deferred by an incentive scheme framed by it would be treated as actually paid, so as to meet the requirements of Section 43B of the Income-tax Act, 1961. It was further held on the basis of the facts of that case that notice had not been taken of the Gujarat Sales Tax Act, 1969, to ascertain whether or not there was such an amendment. The Supreme Court thereafter has taken the view that the question whether the Appellate Tribunal was right in law and facts in directing the Assessing Officer to allow the claim of the assesseein respect of unpaid sales tax if the same was covered by the specific scheme of the Gujarat Government whereby the deferred payment scheme was converted into interest-free loan particularly when the provisions of Section 43B are retrospective in operation was a question of law which had to be referred. Mr. Bhatt has therefore urged that the matter may be remanded to the Tribunal to ascertain as to whether any amendment is made by the State Government in Gujarat Sales Tax Act, 1969.
5. Here, in the present case, as already observed hereinabove, the Gujarat Government has passed a resolution bearing No. INC/1087/143-1, dated March 21, 1988, and the said resolution was made operative from April 1, 1983. The period involved in the present assessment is therefore covered by the said resolution. The benefit is given vide circular dated September 25, 1987 (see [1988] 169 ITR 53), wherein the Board has made it clear that if the sales tax due to the Government is converted as a loan which may be repaid by the assessee subsequently by instalments, the Department shall treat the sales tax due as actually paid for all purposes is available to the assessee. The combined reading of this circular of the Central Board of Direct Taxes as well as the resolution issued by the State Government would make it clear that the assessee is entitled to relief and the benefit given under Section 43B can be claimed by the assessee.
6. It is required to be noted here that subsequently, the State Government has made an amendment in the Gujarat Sales Tax Act and the second proviso to Section 47(4) of the Act was inserted by Gujarat Act No. 5 of 1988, with effect from March 24, 1988, which reads as under (see [1988] 70 STC 207) : 'Provided further that notwithstanding anything contained in this Act or in the rules made thereunder but subject to such conditions as the State Government or the Commissioner may by general or special order specify, where a dealer to whom incentives by way of deferment of sales tax or purchase tax or both have been granted by virtue of an eligibility certificate granted by the Commissioner of Industries, Gujarat State or any officer authorised by him in this behalf and where a loan liability equal to the amount of any such tax payable by such dealer has been raised by the Gujarat Industrial Investment Corporation Limited or the Gujarat State Financial Corporation Limited, then such tax shall be deemed, in the public interest, to have been paid.'
7. Since the resolution issued by the State Government earlier was made effective from 1983, the assessee's case was covered by the said resolution and amendment made thereafter on March 24, 1988, is clarificatory in nature. We are, therefore, of the view that the Tribunal was right in deleting the addition made by the Income-tax Officer invoking the provision of Section 43B in respect of paid sales tax liability.
8. We, therefore, answer this question in the affirmative, i.e., in favour of the assessee and against the Revenue. This reference is accordingly disposed of with no order as to costs.