1990 (10) TMI 118 - AT - Income Tax

Summary

Issues:
1. Disallowance under sec. 43B.
2. Interpretation of the first proviso to sec. 43B.
3. Applicability of Explanation 2 to sec. 43B.
4. Disallowance of provident fund contribution under sec. 43B.

Detailed Analysis:
1. The case involved an appeal by the revenue and a cross objection by the assessee regarding the disallowance made under sec. 43B. The Income-tax Officer had disallowed an amount of Rs. 4,22,605, but the Commissioner(Appeals) restricted it to Rs. 62,071. The dispute arose from the treatment of sales tax collections, surcharge, turnover tax, and central sales tax, along with provident fund contribution as accrued liabilities.

2. The assessee contended that the first proviso to sec. 43B applied as the collections were paid before the due date for filing the return. The Tribunal considered the legislative history of sec. 43B, noting the introduction of the first proviso in 1988 and Explanation 2 in 1989. The Tribunal analyzed the applicability of the first proviso to assessments prior to 1988 and relied on precedents to interpret the provision harmoniously with Explanation 2.

3. Explanation 2 clarified the scope of "any sum payable" under sec. 43B, with retrospective effect from 1-4-1984. The Tribunal discussed the impact of Explanation 2 on the interpretation of the main provision and how it aligned with the first proviso. The Tribunal emphasized the need to read both provisions harmoniously to avoid conflicts in their application.

4. Regarding the disallowance of provident fund contribution under sec. 43B, the Tribunal found that while the sales tax-related payments were made before the due date, there was no evidence of compliance with the conditions of the second proviso introduced in 1989. As a result, the disallowance of Rs. 2,422 for provident fund contribution was upheld, while the balance amount was set aside.

In conclusion, the Tribunal dismissed the revenue's appeal and partially allowed the cross objection of the assessee based on the interpretation of sec. 43B, the first proviso, and Explanation 2, along with the disallowance of provident fund contribution.