High Court Of Punjab & Haryana
CIT vs. Avery Cycle Industries (P) Ltd. (No. 1)
Section 43B
Asst. Year 1987-88
Adarsh Kumar Goel & Rajesh Bindal, JJ.
IT Ref. No. 94 of 1996
5th September, 2006
JUDGMENT
By the court :
The following question of law has been referred for the opinion of this Court by the Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dt. 29th Aug., 1995, in respect of the asst. yr. 1987-88 :
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the liability of Rs. 94,759 is allowable if the payment is made before the due date prescribed under s. 139(1) and that the first proviso to s. 43B has retrospective application though it came into being with effect form 1st April, 1988 ?”
In the course of assessment, the AO disallowed the claim of the assessee on account of salestax/Central Sales-tax and PF shown in the books of account as payable on the ground that the assessee had not actually paid the said amount before the due date prescribed under s. 139(1) of the IT Act, 1961 (for short, “the Act”), and that the first proviso to s. 43B of the Act was not retrospective, which came into force w.e.f. 1st April, 1988.
The CIT(A) affirmed the view taken by the AO. However, on further appeal, the Tribunal reversed the said view and held that the proviso in question was retrospective and was applicable to the asst. yr. 1984-85 onwards. The matter was remanded to the AO to determine whether payments had been made before the due date as specified in the Explanation to s. 36(1)(va) of the Act.
We find that the matter is covered by the judgment of the Hon’ble Supreme Court in Allied Motors (P) Ltd. vs. CIT (1997) 139 CTR (SC) 364 : (1997) 224 ITR 677 (SC), in favour of the assessee and against the Revenue. In the said judgment, after referring to circumstances in which s. 43B of the Act was enacted, i.e., to take care of the situation where taxpayers did not discharge their statutory liability, the Hon’ble Supreme Court referred to circumstances which led to subsequent assessment, i.e., hardship to the taxpayers who had discharged their liability but were prevented from claiming legitimate deduction, which was not intended by the said provision. The amendment by the Finance Act of 1987 was, thus, held to be remedial in nature. Reference was also made to Departmental Circular No. 550, dt. 1st Jan., 1990 [see (1990) 182 ITR (St) 114, 123]. The amendment was held to be retrospective being curative and declaratory. It was observed at p. 685 : “Therefore, s. 43B(a), the first proviso to s. 43B and Expln. 2 have to be read together as giving effect to the true intention of s. 43B. If Expln. 2 is retrospective, the first proviso will have to be so construed. Read in this light also, the proviso has to be read into s. 43B from its inception along with Expln. 2.”
5. Following the above view, we decide the question against the Revenue and in favour of the assessee.
[Citation : 292 ITR 198]
