TMI Blog1993 (6) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... n 43B of the income-tax Act, 1961 would not be applicable in the case? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the provisions of section 43B of the Income-tax Act, 1961 would not be applicable in the case and thereby deleting the addition of ₹ 77,439 made under that section? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the Commissioner of Income-tax (Appeals)'s order directing the Assessing Officer to allow the deduction of ₹ 1,23,704 on account of sales-tax? 2. The assessee is a limited company and the assessment year involved is 1985-86. The facts of the case are that during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an excess payment of ₹ 1,23,704 during the year. It was also stated that in the immediately preceding year of account an amount of ₹ 2,26,629 was disallowed and the excess payment made this year of ₹ 1,23,704 was attributable to the said figure of ₹ 2,26,629. Since the said sum was disallowed in the previous year, the assessee was entitled to a revenue deduction in respect of the sum of ₹ 1,23,704. Further, the addition of ₹ 77,439 made by the ITO should also be deleted. The Commissioner (Appeals) accepted the arguments advanced on behalf of the assessee and directed the ITO to allow deduction of ₹ 1,23,704 and also to delete the addition of ₹ 77,439. Before the Tribunal, the learned dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e only ground that sales-tax forms part of the turnover. It was also found that the amount added back in the last assessment year under the head 'Sales-tax' is larger than the amount of ₹ 1,23,704. The Commissioner (Appeals) was justified in directing the ITO to allow the said amount as a revenue deduction. 6. We have heard the rival contentions. The Tribunal has supported the assessee's contention that where the assessee does not debit the sales-tax to the profit and loss account by way of any provision but credits the sales- tax collection and debits the payment thereof in a separate sales-tax account, liability, thus, appearing in the balance sheet, the provisions of section 43B cannot have application. It is not per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the counsel for the revenue that it is immaterial whether the assessee brings the sales-tax collection to its sales account or not. Therefore, where the assessee credits the sales- tax collection and debits the payments thereof in a separate account maintained for sales-tax, the inherent effect is that the collection is being credited and at once debited to the profit and loss account by way of provision. It is of no effect that such credit of the collection as well as the debit of the provision of the equivalent amount is invisible. The crediting and debiting the suspense account merely hide the true nature of the transaction. 10. Therefore, we answer the first question in the negative and against the assessee. The other t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 16,44,077 and the payment ₹ 17,60,781, thus, there was an excess payment of ₹ 1,23,704 but this excess payment is in the context of the current collection and current payment without taking into account the opening unpaid collection. This contention is also accepted by the Tribunal irrespective of whether the figures are correct or not, insofar as it is based upon the same premise that section 43B is not applicable and there was no case for any addition whatsoever out of the sales-tax payments. The Tribunal is directed to sort out the figures of collection payment and the disallowable amounts on the basis of the principle we have laid down. The matter is remanded to the Tribunal in this respect. There will be no order as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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