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TMI Blog2020 (9) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008 as affirmed by the Commissioner of Income Tax-I, Patna vide order dated 20.01.2011. 2. During the hearing, emphatically, petitioner laid challenge to the virus of the provisions of Section 43B of the Income-Tax Act, 1961. We allowed the learned counsel to address on the same. Also on the strength of decisions rendered by the Gauhati High Court in India Carbon Ltd. v. Inspecting Assistant Commissioner of Income-Tax and another [1993] 200 ITR 759 (Gau), as affirmed by the Hon'ble Apex Court in SLP (C) No.13038 of 1994, titled as Inspecting Assistant Commissioner of Income Tax v. India Carbon Ltd. vide order dated 23.08.1996 and subsequent decision dated 22.05.2003 passed in Commissioner of Income-Tax v. India Carbon Ltd. [2003] 262 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urned the same to the concerned party, added such amount to be part of business income. It is based on the strength of this decision, Revenue seeks to defend the impugned orders. 7. Noticeably, the decision does not deal with the provisions with which we are concerned. 8. Relevant portion of Section 43 B reads as under:- "43B. Certain deductions to be only on actual payment.- Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of-- (a) any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or (b) any sum payable by the assessee as an employer by way of contribution to any provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return. .... (Emphasis supplied) 9. In Allied Motors (P) Ltd. versus Commissioner of Income Tax, Delhi, (1997) 3 SCC 472, the Hon'ble Apex Court in paragraph 6 has gone into the legislative intent and history of enactment of Section 43-B. It observed that:- "To understand the circumstances in which Section 43B came to be inserted in the Income Tax Act and the mischief which it sought to prevent, it is necessary to look at the memorandum explaining the provisions in the Finance Bill of 1983 [(19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee as an employer by way of contribution to any provident fund, or superannuation fund or gratuity fund or any other fund for the welfare of computing the income of that previous year in which such sum is actually paid by him." 10. To our mind, the said Section is an exception to the mercantile system of accounting. It is explicitly added to correct the mischief of claiming deductions without payment of taxes due even at a later stage. The expression used is "same is actually paid by him." In any event, we find the issue is no longer res Integra for Constitutional validity of Section 43B, more particularly Clause (f) thereof, stands affirmed by the Hon'ble Apex Court in Civil Appeal No.3545 of 2009 titled as Union of India & Ors. Exide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on unless expressly provided for. Out of the allowable deductions, the legislature consciously earmarked certain deductions from time to time and included them in the ambit of Section 43B so as to subject such deductions to the conditionality of actual payment. Such conditionality may have the inevitable effect of being different from the theme of the mercantile system of accounting on accrual of liability basis qua the specific head of deduction covered therein and not to other heads. But that is a matter for the legislature and its wisdom in doing so." (Emphasis supplied) 13. And after elaborately discussing the issue, eventually, the Court observed that "Notably, this regulatory measure is in sync with other deductions specified in Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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