TMI Blog2003 (1) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... , is deemed to be an actual payment of the tax liability. Admittedly, this amount is a tax payable. If it is a tax liability on being set off or adjusted, deemed actual payment by legal fiction, it is deductible under section 43B of the Act. - The reference is answered in the affirmative, in favour of the assessee. - - - - - Dated:- 15-1-2003 - Judge(s) : D. K. SETH., R. N. SINHA. JUDGMENT The judgment of the court was delivered by D. K. SETH J.-Leave is granted to Mr. A. K. Dey to file vakalatnama within two weeks. The Income-tax Officer and the appellate authority disallowed the claim for deduction of a sum of Rs. 4,05,744 under section 43B of the Income-tax Act, 1961. The learned Tribunal overruled the same and allowed the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding to the return for any subsequent period. Rule 46(1) puts some restrictions on adjustment. If any notice under section 38(4) of the Bombay Sales Tax Act is issued to a dealer for recovery of any amount pursuant to such notice, the same is to be recovered first before the adjustment is allowed. In this case, there is nothing to indicate that a notice under section 38(4) of the Bombay Sales Tax Act has been issued to the assessee. On the other hand, from the materials it appears that the assessee is entitled to the adjustment under rule 45(3), which he may adjust by himself along with the return submitted. It is not necessary to claim such adjustment otherwise than in the return itself. There is no material to indicate any dispute rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the actual payment by way of adjustment is claimable in the assessment year 1985-86. This liability is admitted. But by reason of rule 41D read with rule 45(3) of the Bombay Sales Tax Rules, the assessee is entitled to claim set off or adjustment of the said amount against its tax liability. Relying on the decisions in K.P. Varghese v. ITO [1981] 131 ITR 597 (SC), wherein the object and purpose of the enactment of section 52 of the Income-tax Act as amended was discussed, he contended that the object and purpose of section 43B of the Income-tax Act is similar to that of section 52 and, therefore, the ratio laid down therein can be attracted herein. He had referred to the decision in Collector of Central Excise v. Dai Ichi Karkaria Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retaining the said sum of the tax liability. The respondent's second contention disputing the claim relatable to the assessment year 1985-86 is no more open to him in view of the observation made in the order of reference, as it appears from page 8 of the paper book where it was observed that the amount was rightly claimed by the assessee for the assessment year 1985-86. This finding of fact bas not been challenged. Therefore, this particular question was not referred to. Once the question has not been referred under section 256(1), the same cannot be reopened even if there might be some material. The court assumes jurisdiction only on the question referred to it and not beyond. If such question is not within the reference, this court ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arkaria Ltd.'s case, AIR 1999 SC 3234; [1999] 112 ELT 353 and in Kalpana Lamps and Components Ltd.'s case [2002] 255 ITR 491 (Mad). Section 43B of the 1961 Act provides for deduction notwithstanding anything contained in any other provision of the 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..." This section is qualified by one Explanation. The Explanation explains that where deduction is allowed on the liability to pay in the assessment for the previous year when the liability was incurred, the assessee shall not be entitled to deduction in the assessment for the previous year in which the amount is actually paid. The scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount in the return itself. It is a provision parallel to sections 199 and 245 of the Income-tax Act creating a legal fiction. Therefore, this sum, which is subject to adjustment or set off, is a liability adjusted deeming actual payment by legal fiction. The Sales Tax Rules have allowed an incentive by way of adjustment of sales tax or in other words, the liability is being adjusted as actual payment. Section 43B of the Income-tax Act allows deduction on tax payable by the assessee. When the assessee purchases raw materials, it is liable to pay purchase tax on the purchase. An equivalent of this amount is adjusted towards the liability on the sale of the product produced out of the raw materials purchased. This adjustment, by legal ficti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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