TMI Blog1990 (5) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... e disallowed under section 43B. The Appellate Assistant Commissioner upheld the disallowance. 3. The assessee is in further appeal. Shri Sodani submitted that the facts of the case were not properly appreciated by the Departmental authorities. He submitted that the assessee charged sales-tax from the customers and was crediting it to a separate sales-tax account. Whatever sales-tax charged or deposited during this year is debited to sales-tax account. These debits represent the monthly or quarterly sales-tax amount paid in any of these years. No provision was made for sales-tax payable in the last quarter of this year. Nothing is debited to the Profit Loss account. Therefore, the provision of section 43B would not apply at all. 4. We have seen the accounts maintained by the assessee regarding the sales-tax liability. The account as it stood for the prior accounting year ending Diwali 1982 is as follows : M/s. Jitaji Chunnilal, Tanda Assessment year 1983-84 Accounting year 1981-82 (Diwali) Sales-tax Account To payments 17,724.00 By Balance b/d 16,006.52 To provisions Nil By Collection during To Balance c/d 21,808.85 the year 23,526.33 -------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f, the matter can be treated as an error apparent on the record and rectifiable. 6. The second part of the order is really giving effect to the provisions of section 43B. In this part of the order the ITO must be satisfied that the facts of the case call for disallowance u/s 43B. Herein the first issue which will have to be decided is whether the assessee has claimed any deduction in computing the income from business. The case of Shri Sodani is that no deduction at all has been claimed. We are unable to accept this submission. It is now well settled that the amount collected by the assessee from the customers by way of sales-tax is also a trading receipt. Its character is determined at the point of receipt. This trading receipt cannot change its character merely because the assessee chose to credit it in the sales-tax payable account instead of trading account. Either way it would continue to be a trading receipt and could be brought to tax. Prior to the introduction of section 43B the crediting of the sales-tax receipt to another account made no difference at all in the ultimate computation of the total income. That was because the assessee could claim an exact equivalent amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es brought in by the Finance Act, 1987 and the Finance Act, 1989, two different arguments have to be considered. The first argument is that the proviso brought in by 1987 Finance Act is declaratory in character, and, therefore, it would apply for all the assessment years. We find it difficult to accept this submission. The characteristics of a declaratory Act has been stated by Craise and approved by the Supreme Court in Central Bank of India v. Their Workmen AIR 1960 SC 12, p. 27 as follows :---- " For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective. The usual reason for passing a declaratory Act is to set aside what the Parliament deems to have been a judicial error, whether in the statement of the common law or in the interpretation of statutes. Usually, if not invariably, such an Act contains a preamble, and also the word 'declared' as well as the word 'enacted'. " Apart from that, in his commentary Principles of Statutory Interpretation, Justice G.P. Singh has observed at page 290 :---- " But the use of the words 'it is declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this amendment an Explanation had been introduced which reads as follows :---- " For the purpose of clause (a), as in force at all material times, 'any sum payable' means a sum for which the assessee incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law. " This has been specifically made retrospective from 1984-85. So its intention is very clear. Whereas the proviso discussed earlier deliberately made operative from 1988-89, this Explanation had deliberately been made retrospective from 1984-85. In this connection, we may also refer to the intention of the Parliament as expressed in the memorandum explaining the provisions in Finance Bill, 1989 :---- " Under the existing provisions of section 43B of the Income-tax Act, a deduction for any sum payable by way of tax, duty, cess or fee, etc., is allowed on actual payment basis only. The objective by denying deduction in respect of a statutory liability which is not paid in time. The Finance Act, 1987, inserted a proviso to section 43B to provide that any sum payable by way of tax or duty etc., liability for which was incurred in the previous year will be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment by the Finance Act, 1989 and had held that the amendment will not have any effect. In coming to this decision a reference had been made to the memorandum explaining the provisions of the Finance Bill. We have already extracted that above, and, in our opinion, that supports the Department's contention. Apart from that a reference is also made to the decision of the Supreme Court in the case of S. Sundaram Pillai v. V.R. Pattabiraman AIR 1985 SC 582 in which certain guidelines to the interpretation of Explanation has been given. They are reproduced below : " It is now well settled that an Explanation added to a statutory provision is not a substantive provision in any sense of the term but as the plain meaning of the word itself shows it is merely meant to explain or clarify certain ambiguities which may have crept in the statutory provisions. The object of an Explanation to a statutory provision is---- ' (a) to explain the meaning and intendment of the Act itself; (b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve ; (c) to provide an additional support ..... X X X X Extracts X X X X X X X X Extracts X X X X
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