COMMISSIONER OF INCOME TAX Vs. YASHPAL GARG & CO
HIGH COURT OF JAMMU AND KASHMIR
COMMISSIONER OF INCOME TAX
Yashpal Garg And Co
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(1.) As to what is the impact and scope of the provisions contained in section 43B of the Income Tax Act, 1961 Income Tax Act is a matter which is required to be examined in this reference preferred under
of the Act. The facts have been taken from IT Reference No. 44 of 1994, ie., CIT v. Yashpal Garg & Co.
(2.) The sales tax collected by the assessee for the assessment years 1984-85 and 1985-86 was not deposited in the year in which it was collected. For the assessment year 1984-85, this amount has been indicated as Rs. 72,745. For the assessment year 1985-86, this amount is said to be Rs. 7,10,765. These amounts were actually paid in the years 1986-87 and 1987-88. The assessing officer while finalising the assessment under the Act came to the conclusion that the assessee is entitled to claim deduction vis-a-vis these payments in computing the income of that previous year in which the sales tax amount referred to above was actually paid. The matter was taken in the appeal. The appeal was dismissed. In further appeal taken before the Tribunal, the Tribunal came to the conclusion that the assessee was entitled to deduction in the previous year in which the sales tax was collected and not in the year in which payment was actually made. The appeal was allowed. It is in these circumstances the revenue submitted an application for formulating a question of law. It was submitted that the question of law does arise and this be referred so that the answer be given to the question, ie., as to whether the deduction was permissible only in the previous year in which the tax was actually paid or this was permissible in the relevant assessment year in which the assessment was made. The question of law which has been referred is being reproduced below:
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the addition of Rs. 72,745 for the assessment year 1984-85 and Rs. 7,10,765 for the assessment year 1985-86 made by the assessing officer by invoking the provisions of section 43B of the Income Tax Act, 1961 ?"
(3.) Before noticing the submissions made by the learned counsels for the parties, it would be relevant to note the provisions of section 43B of the Act. These read as under:
"Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of
(a) any sum payable by the assessee by way of tax, duty, case or fee, by whatever name called, under any law for the time being in force, or
(b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, or
(c) any sum referred to in clause (it) of sub-section (1) of section 36, or
(d) any sum payable by the assessee as interest on any loan or borrowing from any public financial institution, in accordance with the terms and conditions of the agreement governing such loan or borrowing, shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him : . . .";
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