TMI Blog2005 (1) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... w for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Honourable Tribunal was right in law in deleting the addition made under section 43B(a)?" The assessee is engaged in the business of manufacture and sale of synthetic chappal sheets and hawai chappals. For the assessment year 1986-87, it filed a return declaring an income of Rs. 6,27,940. The return was accompanied by copies of the profit and loss account and tax audit report. The Assessing Officer finalised the assessment under section 143(3) of the Income-tax Act, 1961 (for short "the Act"). While doing so, he disallowed the assessee's claim for deduction of Rs. 1,55,935 under section 43B of the Act. The appeal filed by the assessee was dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been made within the period as allowed which would govern the allowability of the expenditure. For this, we restore the matter back to the file of the Assessing Officer for examination and consideration of the assessee's claim. As regards sales tax the scope of the proviso to section 43B inserted by the Finance Act, 1987, w.e.f. April 1, 1988, has been explained by their Lordships of the Patna High Court in the case of Jamshedpur Motor Accessories Stores v. Union of India [1991] 189 ITR 70 as under: 'The object of section 43B of the Income-tax Act, 1961, was to refuse deduction to an assessee in respect of provident fund, etc., where the assessee does not discharge his statutory liability or where the assessee disputes his liability unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The judgment of the Patna High Court in Jamshedpur Motor Accessories Stores v. Union of India [1991] 189 ITR 70 on which reliance was placed by the Tribunal for granting relief to the assessee has been approved by the Supreme Court in Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677. Their Lordships of the Supreme Court considered the scope of section 43B and held (head-note): "Section 43B of the Income-tax Act, 1961, was inserted with effect from April 1, 1984, to discourage taxpayers who did not discharge their statutory liability of payment of excise duty, employer's contribution to provident fund, etc., for long periods of time, but claimed deductions in that regard from their income on the ground that the liability to pay these amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purpose of removing any ambiguity about the term 'any sum payable' under clause (a) of section 43B. Section 43B(a), the first proviso to section 43B and Explanation 2 have to be read together as giving effect to the true intention of section 43B. Explanation 2 being retrospective, the first proviso has also to be so construed. Without the first proviso, Explanation 2 would not obviate the hardship or the unintended consequences of section 43B. The proviso supplies an obvious omission. But for this proviso the ambit of section 43B becomes unduly wide bringing within its scope those payments which were not intended to be prohibited from the category of permissible deductions. The first proviso to section 43B, therefore, has to be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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