Rajasthan H.C : Whether, on the facts and in the circumstances of these cases, the Tribunal erred in law in setting aside the matters to the AO with directions that no disallowances were to be made under s. 43B of the IT Act, 1961 of Rs. 6,570 / Rs. 5,303 / Rs. 24,672 / Rs. 13,459 if such payments had been made on or before the due date applicable for furnishing of return of income under s. 139(1) of the IT Act, 1961 ?

High Court Of Rajasthan

CIT vs. Ashok Mahendra & Co.

Section 43B

Y.R. Meena & A.C. Goyal, JJ.

D.B. IT Ref. Appln No. 18 of 1993

4th February, 2002

Counsel Appeared

J.K. Singhi, for the Applicant : J.K. Ranka, for the Respondent

ORDER

BY THE COURT :

On an application filed under s. 256(1)of the IT Act, 1961 (‘the Act’), the Tribunal has referred the following question : “Whether, on the facts and in the circumstances of these cases, the Tribunal erred in law in setting aside the matters to the AO with directions that no disallowances were to be made under s. 43B of the IT Act, 1961 of Rs. 6,570 / Rs. 5,303 / Rs. 24,672 / Rs. 13,459 if such payments had been made on or before the due date applicable for furnishing of return of income under s. 139(1) of the IT Act, 1961 ?”

2. The assessees are registered firms. The ITO found that the assessee had collected sales-tax from the customers during the relevant assessment years, which were not deposited during the accounting year in question and, therefore, the claim of deduction of sales-tax paid after the accounting year though during grace period has been disallowed by the AO. In appeal before the CIT(A), the CIT(A) has allowed the appeal holding that if the sales-tax has been paid during the grace period, that does not attract the provisions of s. 43B of the Act. The view taken by the CIT (A) has been upheld by’ the Tribunal.

3. This issue has now been concluded by the Supreme Court in the case of Allied Motors (P) Ltd. vs. CIT(1997) 224 ITR 677 (SC), their Lordships observed as under : “This view has been accepted by a number of High Courts. In the case of CIT vs. Chandulal Venichand (1994) 209 ITR 7, the Gujarat High Court has held that the first proviso to s. 43B is retrospective and sales-tax for the last quarter paid before the filing of the return for the assessment year is deductible. This decision deals with asst. yr. 1984-85. The Calcutta High Court in the case of CIT vs. Sri Jagannath Steel Corpn.(1991) 191 ITR 676 (Cal) has taken a similar view holding that the statutory liability for sales-tax actually discharged after the expiry of the accounting year in compliance with the relevant statute is entitled to deduction under s. 43B. The High Court has held the amendment to be clarificatory and, therefore, retrospective. The Gujarat High Court in the above case held the amendment to be curative and explanatory and, hence, retrospective. The Patna High Court has also held the amendment inserting the first proviso to be explanatory in the case of Jamshedpur Motor Accessories Stores vs. Union of India (1991) 189 ITR 70. It has held the amendment inserting first proviso to be retrospective. The special leave petition from this decision of the Patna High Court was dismissed-See (1991) 191 ITR (St) 8. The view of the Delhi High Court, therefore, that the first proviso to s. 43B will be available only prospectively does not appear to be correct. As observed by G.P. Singh in his Principles of Statutory Interpretation, 4th Edn., page 291, ‘It is well settled that if a statute is curative or merely declaratory of the previous law, retrospective operation is generally intended.’ In fact the amendment would not serve its object in such a situation, unless it is construed as retrospective. The, view, therefore, taken by the Delhi High Court cannot be sustained.” Following the view taken by their Lordships in the case of Allied Motors (P) Ltd. (supra), we find no infirmity in the In the result, we answer the question in negative, as that the Tribunal is right in law in setting aside the order of the AO with direction to the AO not to disallow the amount under s. 43B, i.e., in favour of the assessee and against the Revenue.

Reference so made stands disposed of accordingly.

[Citation :268 ITR 500]

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