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Interpretation of section 43B of the Income-tax Act, 1961 regarding taxation of unpaid tax collected in the last month of the previous year as income. Analysis: The judgment involved a common question of law referred by the Income-tax Appellate Tribunal regarding the taxation of unpaid tax collected in the last month of the previous year under section 43B of the Income-tax Act, 1961. The cases concerned different firms but all related to the assessment year 1984-85. The assessees had collected sales tax amounts during the accounting period, with the collections of the last month remaining unpaid by the end of the accounting period. The assessing authority treated these unpaid amounts as the assessees' income, applying section 43B of the Act inserted from April 1, 1984. However, the Commissioner of Income-tax (Appeals) held that section 43B was inapplicable in these cases. The Income-tax Appellate Tribunal dismissed the Revenue's appeals, holding that section 43B only applied when the tax became due for payment in the accounting year and was not paid within that year. The Tribunal referred the common question of law to the High Court, which heard arguments from both the Revenue and the assessees. The Revenue argued that subsequent amendments to section 43B, particularly the insertion of Explanation 2 by the Finance Act, 1989, altered the law to make the section applicable even if the tax was not payable by the last date of the accounting period. The High Court noted that the Appellate Tribunal had decided the appeals before the amendments to section 43B, which significantly changed the law. The Court held that the amended section, along with Explanation 2 effective from April 1, 1984, should be considered to determine the proper provisions of law in these cases. Consequently, the Court declined to answer the question referred and directed the Income-tax Appellate Tribunal to reexamine the appeals in light of the amended law. In conclusion, the High Court's judgment emphasized the importance of applying the amended provisions of section 43B and Explanation 2 to determine the tax treatment of unpaid amounts collected in the last month of the previous year. The Court directed the Appellate Tribunal to reconsider the appeals based on the amended law, highlighting the significance of the legislative changes in interpreting tax liabilities under the Income-tax Act, 1961.
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