Law: Income Tax Act, 1961

Section: 43

Income-tax-----Business expenditure---Deduction only on actual payment---Sales tax--­CBDT issuing circular stating that if a State Government had amended its Sales Tax Act to provide that sales tax deferred under an incentive scheme would be treated as actually paid it would satisfy S. 43B---Tribunal not ascertaining whether there was such an amendment in Gujarat ---Tribunal whether justified in directing Assessing officer to allow claim of assessee in respect of unpaid sales tax if same were covered by specific scheme of Gujarat Government whereby deferred payment scheme was converted into an interest-free loan---Question of law---Indian Income Tax Act, 1961, Ss. 43B & 256---Guiarat Sales Tax Act, 1969---C.B.D.T. Circular No.496, dated 25-9-1987. The Central Board of Direct Taxes Circular, dated September 25, 1987, would apply only if a State Government had amended its Sales Tax Act to provide that the sales tax that was deferred under an incentive scheme framed by it would be treated as actually paid, so as to meet the, requirements of section 43B of the Income Tax Act, 1961: Held, that notice had not been taken of the Gujarat Sales Tax Act, 1969, to ascertain whether or not there was such an amendment. Hence, the question whether the Appellate Tribunal was right in law and on facts in directing the Assessing Officer to allow the claim of the assessee in respect of unpaid sales tax, if the same was covered by the specific scheme of the Gujarat Government whereby the deferred payment scheme was converted into interest-free loan particularly when the provisions of section 43B are retrospective in operation was a question of law which had to be referred. JUDGMENT The High Court declined to call for a reference, at the behest of the Revenue, of the following…

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