2004 (12) TMI 71 - HC - Income Tax

Sales tax liability applicability of section 43B - Whether Tribunal was correct in law in holding that the provisions of section 43B were not applicable in respect of sales tax liability of Rs. 10,272? - It is not in dispute that the amount of Rs. 10,272 which the respondent had collected towards sales tax in the last quarter of the accounting period had been paid over to the Sales Tax Department within the prescribed period in the next accounting year. In this view of the matter it cannot be said that the amount has not been paid over to the Sales Tax Department and the provisions of section 43B of the Act would not be attracted. Thus, we answer the question referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue

Summary

Issues:
Interpretation of section 43B of the Income-tax Act, 1961 regarding sales tax liability for a specific amount collected but not deposited within the accounting period.

Analysis:
The case involves a reference made by the Income-tax Appellate Tribunal, Allahabad, regarding the applicability of section 43B of the Income-tax Act, 1961, concerning a sales tax liability of Rs. 10,272 for the assessment year 1984-85. The respondent firm collected the sales tax amount during the accounting period but did not deposit it within that period. However, the sum was paid in accordance with the U.P. Sales Tax Rules in the subsequent accounting year. The Income-tax Officer added the amount under section 43B, but the Commissioner of Income-tax (Appeals) allowed the claim, a decision upheld by the Tribunal.

During the proceedings, it was noted that the sales tax amount collected by the respondent had been paid to the Sales Tax Department within the prescribed period in the next accounting year. As a result, it was determined that the amount had been duly paid over to the Sales Tax Department, and therefore, the provisions of section 43B of the Act would not be triggered in this scenario.

The High Court, after considering the arguments presented, concluded that the sales tax amount in question had been paid within the required timeframe to the Sales Tax Department. Consequently, the High Court ruled in favor of the assessee, stating that the provisions of section 43B of the Act were not applicable in this case. The judgment was delivered in favor of the assessee, and no costs were awarded in the matter.