Law: Income Tax Act, 1961

Section: 43,43B,142

Income-tax-----Business expenditure---Tax, duty, cess or fee---Deduction only on actual payment---Proviso to S.43B clarifying that sums paid after accounting year but before due date for submission of return would be deductible---Supreme Court decision in Allied Motors (P.) Ltd. v. CIT (1997) 224 ITR 677 that proviso has retrospective operation---Consequent allowance of Rs.1,40,86,821 in assessment year 1986-87---Direction under Art. 142 by Supreme Court that the said amount should be disallowed in assessment year 1987-88---Indian Income Tax Act, 1961, S. 43B---Constitution of India, Art. 142. Held, that in Allied Motors (P.) Ltd. v. C.I.T. (1997) 224 ITR 677, the Supreme Court had held that the proviso to section 43B of the Income Tax Act, 1961, was applicable with retrospective effect. Hence the amount of Rs.1,40,86,821 was allowable for the assessment year 1986-87. In order to avoid technical difficulty, when the Income-tax Officer was giving effect to the order of the Tribunal, he should while allowing the deduction of Rs.1,25,30,853, for. that year, disallow the deduction of Rs.1,40,86,821 granted for the assessment year 1987-88. (Direction issued under Article 142). ORDER The question involved in this reference relates to the allowability of the deduction of Rs.1,40,86,821 claimed by the appellant for the assessment year 1986-87 under section 43B of the Income Tax Act, 1961. The Income-tax Officer had disallowed this deduction for the year 1986-87 but had allowed it for the subsequent assessment year 1987-88. Similarly, in respect of the assessment yeas 1987-88, the Income-tax Officer had disallowed another amount of Rs.1,25,30,853 claimed under section 43B but in appeal the Income-tax Appellate Tribunal has allowed this deduction The effect of the order of the Income-tax Appellate Tribunal is that in respect 1987-88 appellant has got a deduction of Rs.l-,40,86,821 which was allowed by the Income-tax Officer, plus further deduction of Rs.1,25,30,853 as a result of the order of the Income-tax Appellate Tribunal. In view of the decision of this Court in…

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