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2007] 292 ITR 198 [2008] 170 TAXMAN 152 (PUNJ. & HAR.) HIGH COURT OF PUNJAB & HARYANA Commissioner of Income-tax, Ludhiana v. Avery Cycle Inds. (P.) Ltd. ADARSH KUMAR GOEL AND RAJESH BINDAL, JJ. IT REFERENCE NO. 94 OF 1996 SEPTEMBER 5, 2006 Section 43B of the Income-tax Act, 1961 - Business disallowance - Certain deductions to be allowed only on actual payment - Assessment year 1987-88 - Whether proviso to section 43B , which came into force with effect from 1-4-1988, is retrospective - Held, yes - Whether for relevant assessment year, claim of assessee on account of sales tax/CST and PF shown in books of account as payable was allowable, if payment was made before due date prescribed under section 139(1) - Held, yes Circulars and Notifications: CBDT Circular No. 550, dated 1-1-1990 CASE REVIEW Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677/ 91 Taxman 205 (SC), followed [Para 4]. CASE REFERRED TO Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677/ 91 Taxman 205 (SC) [Para 4]. JUDGMENT 1. Following question of law has been referred for opinion of this Court by the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh arising out of its order dated 29-8-1995, in respect of assessment year 1987-88:- "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate 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 section 139(1) and that 1st proviso to section 43B has retrospective application though it came into being with effect from 1-4-1988?" 2. In the course of assessment, the Assessing Officer disallowed the claim of the assessee on account of sales tax/CST 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 section 139(1) of the Income-tax Act, 1961 ('the Act') and that first proviso to section 43B of the Act was not retrospective, which came into force with effect from 1-4-1988. 3. The CIT(A) affirmed the view taken by the Assessing…

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