Orissa H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of sales-tax under s. 43B of the IT Act, 1961, representing sales-tax collected but not paid ?

Counsel Appeared

A. Mohapatra, for the Petitioner : A. Agrawalla, B. Agrawalla & Smt. U. Agrawalla, for the Respondent

JUDGMENT

R.K. PATRA, J. :

At the instance of the Revenue the following question of law has been referred by the Tribunal, Cuttack Bench, Cuttack, under s. 256(1) of the IT Act, 1961 (hereinafter referred to as ‘the Act’), for opinion of this Court :

“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of sales-tax under s. 43B of the IT Act, 1961, representing sales-tax collected but not paid ?”

The opposite party is an assessee under the Act. The year of assessment is 1984-85 and the accounting period is 31st March, 1984. It derives income from sales of Hindustan Lever products, Indian Carbide products, cigar papers, etc. on wholesale basis. It filed return for the year in question on 30th Aug., 1984. The ITO allowed Rs. 49,345 shown as the opposite party’s liability on account of sales-tax for the period under consideration in his assessment order. The CIT in exercise of powers conferred on him under s. 263 of the Act called for the income-tax records and after examining the same by order dt. 27th March, 1987, set aside the assessment as, according to him, it was erroneous and prejudicial to the Revenue and directed the ITO to make fresh assessment after taking into account the facts mentioned in his order. Since this matter is confined to deduction of sales-tax, we may only refer to the finding of the CIT on that point. The CIT held that the ITO was not correct in allowing the sales-tax liability without examining the exact nature of those liabilities and whether they were hit by s. 43B of the Act. Being felt aggrieved by the order of the CIT, the opposite party preferred appeal before the Appellate Tribunal (hereinafter referred to as ‘the Tribunal’) who by order, dt. 9th March, 1990, allowed the appeal on the ground that when the ITO had taken a possible view in favour of the assessee with regard to interpretation of s. 43B of the Act, it cannot be said that his order is erroneous or prejudicial to the interest of the Revenue. The CIT thereafter made an application to the Tribunal under s. 256(1) of the Act to refer four questions to this Court for adjudication. But the Tribunal has referred the sole question mentioned above.

The question posed for our opinion is concluded in view of the decision of this Court in CIT vs. Pyarilal Kasam Manji & Co. (1992) 101 CTR (Ori) 247 : (1992) 198 ITR 110 (Ori) : TC 19R.738 and decision of the Supreme Court in Allied Motors (P) Ltd. etc. vs. CIT (1997) 139 CTR (SC) 364 : (1997) 224 ITR 677 (SC) : TC S19.2151 on the interpretation of s. 43B of the Act. It has been held by the Supreme Court in the aforesaid case that the sales-tax for the last quarter paid before filing of the return for the assessment year is deductible under the first proviso to s. 43B of the Act, the said proviso being retrospective. This being the position, we answer the question against the Revenue and held that the Tribunal was justified in deleting the addition of sales-tax under s. 43B of the Act. The application is dismissed.

CH. P.K. Misra, J. : I agree.

[Citation : 248 ITR 248]