Law:

Section:

Section 43B of the Income-tax Act, 1961 - Certain deductions to be only on actual payment - Assessment year 1984-85 - Whether first proviso to section 43B inserted by Finance Act, 1987, with effect from 1-4-1988 applies to an assessment proceeding in respect of assessment year 1984-85 - Held, yes -Whether assessee-firm was entitled to deduction in respect of State sales tax, additional sales tax and Central sales tax, which was not paid during relevant accounting period but was actually paid before due date of furnishing re urn of income under section 139(1) - Held, yes - Whether assessee was entitled to deduction of payments in respect of provident fund and family pension scheme, which were not paid during relevant accounting year but actually made on or before due date as defined in Explanation below clause (va) of sub-section (1) of section 36 - Held, yes FACTS The assessee-firm was following mercantile system of accounting and its accounting year was from January to December. For the assessment year 1984-85, the assessee filed its return on 30-8-1984. The Assessing Officer found that the statutory dues payable during the accounting year on account of State sales tax, additional sales tax, Central sales-tax, provident fund and family pension had not been paid by the petitioners, before the end of the relevant accounting year and, therefore, he added such amounts to the net income of the assessee under section 43B. On writ, the assessee contended that the first proviso to section 43B inserted by the Finance Act, 1987 with effect from 1-4-1988 shall apply to an assessment proceeding in respect of the assessment year 1984-85, and, thus, it was entitled to claim deduction in respect of State sales-tax, additional sales-tax, Central sales-tax, provident fund and family pension as the same had actually been paid by it on or before the due date applicable to it for furnishing return of income under section 139(1). HELD It is absolutely clear that the first proviso to section 43B inserted by the Finance Act, 1987, was enacted in order to suppress the mischief and for the purpose of giving relief to an assessee who is not an unscrupulous dealer. The aforesaid proviso…

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