Ajit K. Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1986-87, the following questions of law have been referred to this court : "(1) Whether, on the facts and in the circumstances of the case, and also on a proper interpretation of the provisions of Section 43B of the Income-tax Act, 1961, the Tribunal was correct in law in holding that the first proviso to Section 43B of the Income-tax Act, 1961, introduced by the Finance Act, 1987, with effect from April 1, 1988, would be applicable to the assessment year 1986-87 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in deleting the disallowance made under Section 43B of the Income-tax Act, 1961, in respect of sales tax liability not paid within the relevant accounting period ?"
(2.) Shortly stated, the facts leading to this reference are that the assessee is a private limited company. The assessment year involved is 1986-87 for which the relevant previous year ended on December 31, 1985. The Assessing Officer disallowed the outstanding sales tax liability of Rs. 33,754 under Section 43B of the Income-tax Act, 1961, on the ground that it was not paid within the accounting year.
(3.) Being aggrieved by the aforesaid disallowance, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) and submitted that the sales tax liability in question was for the last quarter of the accounting year, ending December 31, 1985 and it was paid within a month, i.e., on January 30, 1986, as per the provisions of the Sales Tax Act. The assessee, therefore, claimed that since the amount was paid before the due date for payment under the relevant statutory provision, the provisions of Section 43B of the Income-tax Act, 1961, would not be attracted in its case and hence no disallowance should be made. The Commissioner of Income-tax (Appeals) held that the provisions of Section 43B would be clearly applicable. However, he reduced the disallowance to Rs. 7,823.;