1989 (12) TMI 96 - AT - Income Tax

Summary

Issues:
1. Disallowance of sales tax collected in the last quarter but deposited in the next financial year under section 43B.
2. Levy of interests under sections 139(8), 215, and 217 of the IT Act.

Detailed Analysis:

1. The first issue in this case pertains to the disallowance of sales tax collected in the last quarter but deposited in the next financial year under section 43B. The assessee argued that the sales tax was collected in the last quarter of the financial year and deposited within the statutory time limit as per Sales Tax Laws, even though the deposit fell in the next financial year. The assessee relied on various Tribunal decisions and High Court rulings to support their argument that such payments should be treated as paid within the previous year relevant to the assessment year. The Tribunal analyzed the provisions of section 43B, the Explanation added by the Finance Act, 1989, and the proviso effective from 1-4-1988. The Tribunal concluded that the intention of the Legislature was to allow deduction for taxes paid in the year of actual payment, irrespective of the year to which such taxes relate. The Tribunal emphasized that the assessee should not be denied deduction if taxes are paid before the due date of filing the return of income. Therefore, the Tribunal held that the assessee should be entitled to the deduction of sales tax collected and paid within the statutory time limit provided by the Sales Tax Laws. The matter was remanded back to the ITO for further examination on this issue.

2. The second issue concerns the levy of interest under sections 139(8), 215, and 217 of the IT Act. The assessee's applications for waiver of interest were pending with the ITO, and the CIT(A) directed the ITO to dispose of those applications. The Tribunal noted that this issue did not require any interference. Consequently, the appeal was treated as allowed in part, with the first issue regarding the disallowance of sales tax being remanded back to the ITO for further examination while the second issue regarding the levy of interest did not call for any interference.