Commissioner of Income Tax vs Girdhari Lal Madho Prasad

The Income Tax Appellate Tribunal, Allahabad has referred the following questions of law u/s 256(2) of the Income Tax Act, 1961 (hereinafter referred to as the Act), for opinion to this Court. Whether on the facts and in the circumstances of the case, the Tribunal was justified in allowing the deduction of Sales Tax and Mandi Tax in the account concerned thereby attracting the provisions of Section 43(b) of the Income Tax Act.

The reference relates to assessment years 1984-85.

Briefly stated the facts giving rise to the present reference are as follows:

The previous year of the assessee, by statues a Registered firm was financial year. In its Balance Sheet as on 31.3.1994 relevant to assessment year 1984-85, there were outstanding liabilities of Rs. 1,47,931 and Rs. 2,01,269, on account of Sales Tax and Mandi Tax respectively. These were disallowed by the Assessing Officer (AO) u/s 43B of the Income Tax Act, 1961.

In appeal, vide order dated 6.11.1987, the learned Commissioner of Income Tax (CIT) (Appeals) observed that the Sales Tax collected in the month of March, 84 was as per Sales Tax Rules, payable by 30 April. It was held that Section 43B would not be applicable if the payment was made within such time. The Assessing Officer was directed to verify as to how much of the Sales Tax collected by the assessee in March, 194 was paid in April 1984 and to that extent reduce the addition. Regarding Mandi Tax, the learned (CIT) (Appeals) accepted assessee''s plea that it was actually Fees and as such different from "Tax" or "Duty" and hence provisions of Section 43B were not applicable to the outstanding amount. Accordingly, the addition made in this account was deleted.

In appeal by the Department, the Appellate Tribunal, following its decision in the case of Prakash Cables v. ITO [IT Appeal Nos. 1300 to 1302 (All.) of 1991, dated 11.2.1992], held that the Sales Tax collected in March and payable in the following month of April was not hit by the provisions of Section 43B of the Act. The contentions of the Department to the contrary were not found tenable.

The Tribunal did not accept Department''s contention that the amendment made by the Finance Act, 1988 to bring ''Fee'' within the purview of Section 43B of the I.T. Act was only clarificatory in nature. It was held that the amended section was applicable with effect 1.4.1989 and not to the assessment ear in question i.e. 1984-85. Vide order dated 9.6.1992 in I.T. No. 562 (Alld.)/1988 the Department''s appeal was dismissed in both the issues.

We have heard Sri A.N. Mahajan, learned Standing counsel for the revenue''s no one was appeared for the respondent assessee.

We find that it has come on record that the amount of Sales Tax and Mandi fee collected by the respondent assessee in the month of March, 1984 within the stipulated period and therefore the principles laid down by the Apex Court in the case of Allied Motors (P.) Ltd. Vs. Commissioner of Income Tax, Delhi, is fully applicable. The order of the Tribunal is in conformity with the decision of the Apex Court as referred to above.

We, therefore, answer the question in the affirmative that in favour of the assessee and against the revenue. There shall be no order as to costs.