TMI Blog1996 (7) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 31 of the Income-tax Act cannot be partly disallowed under section 37(3A) of the Income-tax Act, 1961 ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing unpaid sales tax liability of Rs. 1,49,988 added back by the Income-tax Officer under section 43B by holding that the notification issued by the Central Board of Direct Taxes No. 496, dated September 25, 1987, has retrospective effect ? (iii) Whether the Tribunal was justified in law to hold that for working out the deduction under sections 80HH and 80-I, the earlier years' losses could not be deducted from the current year's income ? " The brief facts giving rise to these questions are that during the course of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the first question has to be answered in favour of the Revenue and against the assessee. The assessee also claimed a liability of Rs. 1,49,988 towards payment of sales tax which remained unpaid throughout the previous accounting period and in the next succeeding previous year as well. The Assessing Officer invoked the provisions of section 43B and disallowed the claim. On appeal by the assessee, the Commissioner of Income-tax (Appeals) allowed the claim and held that as per the Central Board of Direct Taxes Circular No. 496, dated September 25, 1987, an assessee who is notified to be entitled for the benefit of deferred payment scheme, is entitled to retain the sales tax collected from customers for a period of ten years and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d this aspect also and we find that the approach of the Commissioner of Income-tax (Appeals) and the Tribunal is correct. If the losses of the earlier years are deducted from the current year's total income under sections 80HH and 80-I, the amount of benefit will be reduced to a considerable extent. As a matter of fact, the benefits under section 80HH and section 80-I are in the nature of incentives for these industries in the backward areas. Therefore, a positive approach should be taken in the matter. We are of the opinion that the Commissioner of Income-tax (Appeals) and the Tribunal have correctly held in favour of the assessee and against the Revenue. As a result of the above discussion, question No. 1 is answered in favour of the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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