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TMI Blog1989 (11) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... the previous year. The ITO was of the view that all these amounts totalling Rs. 13,068 had to be disallowed under s. 43B of the Act. This disallowance was confirmed, on appeal, by the CIT(A) on the ground that that section provided for deduction of such dues only on cash basis and not an accrual basis. 3. In the further appeal before us it was contended on behalf of the assessee that the provision was not intended to be applicable to the amount for which there was still time under the respective Statutes to make payment and reliance was placed on the decision of the Andhra Pradesh High Court in the case of SINKAKOLLU SUBBA RAO CO. vs. UNION OF INDIA ORS (1988) 71 CTR (AP) 34 : (1988) 173 ITR 708 (AP). On the other hand, it was conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum is actually paid. The Tribunal considered this provision in several decisions and came to the conclusion that it could apply to sums, particularly sales-tax, in respect of the such tax Statutes had allowed time for payment immediately beyond the previous year (KAPOOR MOTOR ENGINEERING (P) LTD vs. ITO (1987) 29 TTJ 127 (Ctk) : (1987) 21 ITD 4 (Ctk)). The same view was taken by the Andhra Pradesh High Court in the case of SINKAKOLLU SUBBA RAO Co. The Court held that not only should the liability to pay the tax or duty be incurred in the accounting year but the amount also should be statutorily payable in the accounting year to attract the provisions of s. 43B. The Court also noted that the proviso had been introduced from 1st April, 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bill, 1989, states (1989) 76 CTR (St) 18 : (1989) 176 ITR (St) 123 that the objective behind these provisions is to provide for a tax disincentive by denying deduction in respect of a statutory liability which was not paid in time. It also mentions that the Finance Act, 1987 inserted a proviso to s. 43B to remove the hardship caused to certain tax-payers who had represented that since the sales-tax for the last quarter cannot be paid within that previous year, the original provisions of s. 43B will unnecessarily involve disallowance of payment for the last quarter. This affirms the judgment of the High Court. Yet it goes to say the certain courts have interpreted the provision of s. 43B in a manner which may negate the very operation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation of the same." In the light of this law laid down by the Supreme Court it would appear that this Explanation cannot change the meaning of section as understood by the High Court and become a hindrance in the operation of the section as intended by the proviso introduced to the section earlier which is in conformity with the construction placed by the High Court. The memorandum of objects itself has stated that the section is not intended to disallow the payment of dues of the last quarter of the previous year which is an exercise in futility since it is to be allowed in the immediately succeeding assessment year. The contention raised by the Revenue, therefore, appears to go against the intention of the Department and invol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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