Commissioner of Income-tax Vs. Prafulla Box Mfg. Co. (P.) Ltd. - Court Judgment

Excerpt:
- ajit k. sengupta, j. 1. in this reference under section 256(1) of the income-tax act, 1961, for the assessment year 1986-87, the following questions of law have been referred to this court :'(1) whether, on the facts and in the circumstances of the case, and also on a proper interpretation of the provisions of section 43b of the income-tax act, 1961, the tribunal was correct in law in holding that the first proviso to section 43b of the income-tax act, 1961, introduced by the finance act, 1987, with effect from april 1, 1988, would be applicable to the assessment year 1986-87 ? (2) whether, on the facts and in the circumstances of the case, the tribunal was correct in law in deleting the disallowance made under section 43b of the income-tax act, 1961, in respect of sales tax liability not paid within the relevant accounting period ?' 2. shortly stated, the facts leading to this reference are that the assessee is a private limited company. the assessment year involved is 1986-87 for which the relevant previous year ended on december 31, 1985. the assessing officer disallowed the outstanding sales tax liability of rs. 33,754 under section 43b of the income-tax act, 1961, on the ground that it was not paid within the accounting year.3. being aggrieved by the aforesaid disallowance, the assessee filed an appeal before the commissioner of income-tax (appeals) and submitted that the sales tax liability in question was for the last quarter of the accounting year, ending december 31, 1985 and it was paid within a month, i.e., on january 30, 1986, as per the provisions of the sales tax act. the assessee, therefore, claimed that since the amount was paid before the due date for payment under the relevant statutory provision, the provisions of section 43b of the income-tax act, 1961, would not be attracted in its case and hence no disallowance should be made. the commissioner of income-tax (appeals) held that the provisions of section 43b would be clearly applicable. however, he reduced the disallowance to rs. 7,823.4. being aggrieved the assessee came up in second appeal before the tribunal. the tribunal following the decision of the ahmedabad bench in the case of ito v. k. s. lokhandwala , held that section 43b would not be applicable if the outstanding liability is cleared before the due date of submission of return for the relevant assessment year. the tribunal accordingly directed the assessing officer to verify the date of payment of sales tax liability and allow relief to the assessee in the light of the decision in the case of k. s. lokhandwala .5. it is not in dispute that these questions are now concluded by the decision of this court in the case of cit v. sri jagannath steel corporation : [1991]191itr676(cal) . following the said decision, we answer both the questions in this reference in the affirmative and in favour of the assessce.6. there will be no order as to costs.shyamalkumar sen, j. 7. i agree.