Ajit K.Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1984-85, the following question of law has been referred to this court : "Whether, on the facts and in the circumstances of the case and on a proper interpretation of the provisions of Section 43B of the Income-tax Act, 1961, read with Explanation 2 thereof which was made effective from April 1, 1984, the Tribunal was correct in law in holding that since the Central sales tax and West Bengal sales tax amounting in total to Rs. 5,04,316 were paid within the statutory due dates for payment as per the respective Sales Tax Act, the same should be deducted even though they were not paid within the previous year maintained by the assessee?"
(2.) The brief facts of the case are that, on examination of the books of account, the Assessing Officer found that the Central sales tax and local sales tax collected remained unpaid till the end of the previous year in respect of the head office and branch offices. He, accordingly, disallowed Rs. 3,40,054 on account of Central sales tax collected but remained unpaid. Similarly, the Assessing Officer disallowed Rs. 2,01,933 on account of local sales tax collected but remained unpaid till the end of the previous year in respect of the head office and the branch offices.
(3.) The assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals) and argued that the sales tax collections and payment thereof were not part of the assessee's profit and loss account since a separate sales tax account was maintained in the books of account and the unpaid balances were taken to the next year under the head "Sundry creditors". It was further argued that the sales tax collected was paid as per the relevant provisions of the Sales Tax Acts of the concerned States. The amounts disallowed by the Assessing Officer were sales tax collected in the last quarter of the accounting year due to which it remained unpaid on the last date of the year. Therefore, the provisions of Section 43B of the Income-tax Act, 1961, were not attracted. The Commissioner of Income-tax (Appeals), following the decision of the Tribunal, 'B' Bench, Calcutta, in the case of India Automobiles (1960) Ltd. v. ITO in Income-tax Application No. 12 of 1987 dated October 18, 1987, allowed the assessee's claim and deleted the addition made by the Income-tax Officer.;