Law:

Section:

Section 43B of the Income-tax Act, 1961 - Business disallowance - Certain deductions to be allowed only on actual payment - Assessment year 1984-85 - Sales tax collected by assesses during relevant accounting period remained unpaid on last date of accounting period - Assessing Officer held that such sums attracted section 43B and treated amount collected by assessee as assessee's income - Tribunal held that section 43B was not attracted - Provisions of section 43B as amended retrospectively by Direct Tax laws (Amendment) Act, 1987, Finance Act, 1988, and Finance Act, 1989 were not available at time when Tribunal decide appeal - Whether amendment made in section 43B should be considered by Tribunal for relevant assessment year to give effect to proper provisions of law applicable to instant case - Held, yes [Case remanded back] FACTS The assessees had collected amounts by way of sales tax during the accounting period relevant to assessment year in question. The collections of the last month of the previous year were not paid during the year to the Government. They were not debited to the profit and loss account. They were not claimed as deduction while computing the income taxable under the Act. But, the same were shown as sales tax payable in the balance-sheet. The amounts were not paid on or before the last date of the accounting periods, since the time for the discharge of that was not over by then. In all the cases, the assessing authority held that such sums would attract section 43B, inserted in the statute with effect from 1-4-1984. Such collections made, but remaining unpaid on the last date of the accounting period, were treated as the assessee's income. The Commissioner (Appeals) held that section 43B was inapplicable. The finding of Commissioner (Appeals) was affirmed by the Tribunal. On reference : HELD The amendment made to section 43B by the Direct Tax Laws (Amendment) Act, 1987, the Finance Act, 1988, and the Finance Act, 1989, and Explanation 2 to the section which took effect from 1-4-1984 were not available at the time when the decision in the appeal was rendered by the Tribunal and thus the Tribunal had no opportunity to consider the proper…

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