- (1.) The respondent-assessee is engaged in the manufacture and sale of foreign liquor and sugar. The assessee filed its return of income for assessment year 1990-1991 declaring an income of Rs. 15,84,398/-. The assessee had itself shown that a vend fee of Rs. 22,87,512/- was disallowable under Section 43B of the Income Tax Act (hereinafter referred to as 'Act') since it was not actually paid before the expiry of the relevant previous year.
(2.) On 30.04.1993, the assessing officer completed the assessment for the year 1990-1991 and inter alia confirmed disallowance of the vend fee. Against this, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who, by his order dated 24.05.1993, deleted the disallowance under Section 43B and allowed the appeal of the respondent-assessee. Aggrieved by the said order, the Revenue preferred an appeal before the Income Tax Appellate Tribunal, which confirmed the aforesaid order of the Commissioner (Appeals) by its judgment and order dated 15.04.1998. Against the said order, the Revenue preferred a Reference Application before the Income Tax Appellate Tribunal under Section 256(1) of the Act, which referred two questions of law to the High Court. In the present appeal, we are concerned with Question No. 2 which reads as follows: - "2. "Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in upholding the deletion of disallowance under S. 43B of the I.T. Act in respect of the vend fee of Rs. 22,87,512/- outstanding as a liability payable to the Government of Kerala as on the last day of the accounting year -
(3.) Section 43B of the Income Tax Act allows certain deductions only to be on actual payment. Section 43B reads as follows: - "43B. 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, cess 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 (ii) 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 or a State financial corporation or a State industrial investment corporation, in accordance with the terms and conditions of the agreement governing such loan or borrowing, or (e) any sum payable by the assessee as interest on any loan or advances from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan or advances, or (f) any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee, 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:";