2013 (4) TMI 288 - HC - Income Tax

Applicability of provisions of Section 43B denied - whether the Tribunal was correct in holding that provisions of Section 43B are not applicable although, the payment has been made after the close of the accounting year? - assessee is a registered firm derived income by running a cinema house - Held that - The controversy stands concluded against the department as decided in Allied Motors(P) Ltd. versus Commissioner of Income Tax 1997 (3) TMI 9 - SUPREME COURT wherein it has been held that if the tax is so collected and deposited even after the expiry of the accounting year but on the due date, the deduction cannot be disallowed under section 43-B. Also see Commissioner of Income Tax versus Krishna Satya Narain (2004 (12) TMI 71 - ALLAHABAD HIGH COURT) - in favour of assessee.

Summary

Issues: Interpretation of Section 43B of the Income Tax Act, 1961 regarding the applicability of provisions when payment is made after the close of the accounting year.

Analysis:
The Income Tax Appellate Tribunal referred a question to the High Court regarding the correctness of holding that Section 43B of the Income Tax Act, 1961, is not applicable when payment is made after the close of the accounting year. The dispute pertains to the assessment year 1984-1985. The assessee, a registered firm operating a cinema house, collected entertainment tax in late December 1983 but deposited it in the State Government's account in early January 1984. The assessing authority disallowed the deduction claim, citing that the tax was deposited after the accounting period's close but before the due date for deposit.

The High Court noted the precedent set by the Apex Court in the case of Allied Motors(P) Ltd. versus Commissioner of Income Tax 1997 224 ITR 677, where it was established that if the tax is collected and deposited after the accounting year's expiry but before the due date, the deduction cannot be disallowed under Section 43-B of the Act. Additionally, the High Court referenced its own ruling in the case of Commissioner of Income Tax versus Krishna Satya Narain (2005) 277 ITR 354, which supported the same interpretation.

Based on the legal precedents and the specific circumstances of the case, the High Court answered the referred question in the affirmative, favoring the assessee and against the revenue. It is noteworthy that no representation was made on behalf of the assessee, and no costs were awarded in the judgment.