1990 (9) TMI 59

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..... le by invoking the provisions of section 43B of the Income-tax Act, 1961 ?" The assessees in the three cases are different firms. But, all the cases relate to the assessment year 1984-85. The accounting period, in the case of the assessee which is the subject-matter of Income-tax Reference No. 211 of 1987, is 1158 M. E. But, in the case of the other two assessees, the accounting period ended by March 31, 1984. The assessment year in all the three cases is 1984-85. All the assessees had collected amounts by way of sales tax during the relevant accounting period. The collections of the last month of the previous year were not paid during the year to the Government. They were not debited to the profit and loss account. They were not claimed .....

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..... late Tribunal. By common order dated July 31, 1986, the Income-tax Appellate Tribunal dismissed the appeals filed by the Revenue. The Appellate Tribunal did so by following its earlier order in the case of S. Govindaraja Reddiar, Quilon (I. T.A. No. 20/Coch/ 1986). The Appellate Tribunal held that section 43B of the Act came into play only when the tax has accrued and be came due for payment in the accounting year and the assessee had not paid the same within the accounting year and that it will not have any application in cases where the time for the discharge of tax was not over by the end of the accounting year. It is thereafter at the instance of the Revenue that the Income-tax Appellate Tribunal has referred the common question of law .....

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..... for the Revenue submitted that, in view of Explanation 2 to section 43B of the Act, which took effect from April 1, 1984, the observations contained in the decision of the Andhra Pradesh High Court in Srikakollu Subba Rao and Co.'s case [1988] 173 ITR 708 at pages 718 and 719 have been superseded. In effect, the result is that section 43B of the Act will apply where the liability to pay the tax or duty was incurred in the accounting year for which the amount was collected and the amount was actually paid by the assessee, though such amount might not have been payable on or before the last date of the accounting period. It was submitted that Explanation 2 inserted by the Finance Act, 1989, took effect from April 1, 1984, and it has completel .....

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