Simla Automobiles vs Commissioner of Income Tax

M.K. Sharma, J.—By this petition u/s 256(2) of the income tax Act, 1961 (''the Act''), the assessee seeks to call for a reference on the following question, stated to be question of law, relevant for the assessment year 1984-85: Whether, on the facts and in the circumstances of the case, the Hon''ble income tax Appellate Tribunal was right in law in setting aside the order of the learned Commissioner of income tax (Appeals) and confirming the disallowance of Rs. 2,15,453 u/s 43B of the income tax Act, 1961 when the payment was made within the time prescribed by the Himachal Pradesh Sales Tax Act?

We Have heard the learned counsel for the parties and have also gone through the impugned order passed by the Tribunal. The question proposed by the assessee appears to rest upon the issue as to whether the assessee is entitled to claim deduction of Rs. 2,15,453 representing sales- tax collected by the assessee for the last quarter payable by 30-4-1984, the accounting period being 31st March and the assessee being liable to make payment within one month after the close of each year under the provisions of the Himachal Pradesh Sales Tax Act. The said amount stood duly paid on 27-3-1984. 2. The ITO disallowed the aforesaid deduction claimed by the assessee on the ground that the said amount although was shown payable was not actually paid during the relevant previous year. On appeal being preferred by the assessee, the Commissioner (Appeals) held that the assessee was entitled to such deduction and that the ITO was not justified in adding the same to the income of the assessee. The Tribunal, on further appeal, took note of two conflicting decisions, one of this Court in Escorts Ltd. Vs. Union of India and others, and the other of Patna High Court in Jamshedpur Motor Accessories Stores Vs. Union of India (UOI) and Others, , held that the assessee being located within the jurisdiction of this Court, the view expressed by this Court in Escorts Ltd.''s case (supra) is to be accepted. Following the said decision, the Tribunal confirmed the disallowance. The petition filed by the assessee u/s 256(1) of the Act was also dismissed by the Tribunal.

In Escorts Ltd.''s case (supra), this Court held that section 43B was clear and unambiguous and all that it provided was that deduction of sales tax would be allowed when the money was actually paid and not when the liability was incurred. On the other hand in Jamshedpur Motor Accessories Stores'' case (supra) the Patna High Court held that the provisions of section 43B were applicable even though payment was not actually made, which interpretation favours the assessee of the present case.

It is brought to our notice that on a SLP filed by an assessee against a judgment passed by this Court relying on Escorts Ltd.''s case (supra), the Supreme Court has granted Special Leave to Appeal [See Vol. 191 ITR (St.) 3]. On the other hand, the SLP filed by the revenue against the judgment of the Patna High Court in the case of Jamshedpur Motor Accessories Stores (supra), the Supreme Court dismissed the said petition. [See 191 ITR (St.) 8].

On giving our thoughtful consideration to the entire facts and circumstances stated above, we are of the considered view that a question of law does arise out of the impugned order passed by the Tribunal. Accordingly, we issue a direction to the Tribunal to refer the aforesaid question of law along with a statement of case to this Court for its opinion. The petition, thus, stands allowed but without any costs.