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TMI Blog1989 (9) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... on that score were directly reflected in the balance-sheet. The ITO rejected the aforesaid explanation on the ground that s. 43B clearly provided that payments on account of taxes and duties would be allowed only in the year of actual payment. the ITO also referred to the decisions of the Hon'ble Supreme Court in the cases of Chowringhee Sales Bureau P. Ltd. vs. CIT (1973) CTR (SC) 44 : (1973) 87 ITR 542 (SC) and Sinclair Murray & Co. P. Ltd. vs. CIT (1974) CTR (SC) 283 : (1974) 97 ITR 615 (SC) for the proposition that the amount realised as sales-tax formed part of the trading receipts although they stood credited to the "ST A/c". The CIT(A) confirmed the addition made by the ITO. 4. The learned counsel for the assessee at the outset placed for our consideration relevant facts of the case and since these are not any different to those recorded by the authorities below, we need not reproduce them. He however highlighted the following: (1) The amount under consideration represented the collections made during the last quarter of the accounting period and the sum in question had been paid over to the Govt. Account within the statutory period provided by the Sales-tax legislation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court supra which had been relied upon by the ITO in making the addition. As regards the first proviso to s. 43B the learned Departmental Representative stated that this was applicable only w.e.f. 1st April, 1988 viz. asst. yr. 1988-89 and would not help the assessee in so far as the present assessment year was concerned. He finally urged that the disallowance as made by the ITO and confirmed by the CIT(A) be maintained. 7. We have examined the rival submissions and have also perused the material available on record. The authorities cited at the bar have also have duly considered. It is an undisputed fact that the amount under consideration represents the collections on account of sales-tax for the last quarter of the accounting period. It is also an accepted fact that the amount has been paid over to the Govt. Account within the statutory period as provided by the relevant State legislation. We would however have to examine the assessee's case vis-a-vis the legislative intent in brining on the statute book s. 43B. Further examination would also be required in respect of the charges introduced by various Finance Acts. 8. The Finance Minister in his Budget Speech for the year 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the assessee as an employer by way of contribution to any provident fund, or superannuation fund or gratuity fund or any other fund for the welfare of the employees shall be allowed only in computing the income of that previous year in which such sum is actually paid by him. 61. This amendment takes effect from 1st April, 1984, and will accordingly apply in relation to the asst. yr. 1984-85 and subsequent years." [(140 ITR (Statutes) Page 160)] 10. It is apparent form the speech and the memorandum that the object of introducing s. 43B was to prevent the grant of deduction in respect of various Govt. dues and taxes where the taxpayers did not discharge their statutory liability or where the taxpayers disputed the liability under the provisions of the respective laws and kept back the payment for a long period. The provisions of s. 43B were however not meant for disallowance of admitted sales-tax liability which had been paid within the time prescribed under the representative State legislation. 11. The aforesaid intention and purpose becomes further apparent from the insertion of the first proviso by the Finance Act, 1987 which provided that no disallowance was to be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he object behind introducing s. 43B was to provide for a tax disincentive by denying deduction in respect of a statutory liability which was not paid in time. The purpose was not to deny deduction of the amounts which were paid in time by the taxpayers. It was with a view to ensure that the original provisions of s. 43B did not result in unnecessary disallowance of the payment of sales-tax pertaining to the last quarter, the Finance Act, 1987 inserted the above proviso to s. 43B to obviate any unintended hardship likely to be caused to the taxpayers. The insertion of the aforesaid proviso by the Finance Act, 1987 clarifies the real intention of introducing the provisions of s. 43B. 12. A few words at this stage about the applicability of the aforesaid proviso which came into force w.e.f. 1st April, 1988. We are of the view that the same would be applicable right from the inception, viz., the date from which s. 43B was introduced. The same was inserted with the sole object of explaining the real intent in introducing s. 43B and would be applicable from the time when s. 43B was introduced, viz., asst. yr. 1984-85. 13. We are also of the view that two decisions of the Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is the addition to the trading account made by the ITO at Rs. 10,000 and reduced to Rs. 5,000 by the CIT(A). 19. The assessee in this case is engaged in the tea business on a wholesale basis. The ITO in the course of the assessment proceedings observed that there was a fall in the g.p. rate from 7.2 per cent in the immediately preceding assessment year to 5.8 per cent in the year under consideration. It was also noted that the assessee was not maintaining a day to day stock register. The ITO also requested the assessee to furnish the quantitative details in kilograms but these were not filed. The ITO however observed that the assessee had filed the quantitative tally in "boxes". On being asked to explain the fall in the g.p. the assessee vide its letter dt. 2nd Jan., 1986 stated as follows (as per ITO): "there are so many reasons for increasing and decreasing in sales and g.p. Some like— a. Availability of goods in market b. Government's import and export and other policies. c. Pending orders for purchase of goods etc." The ITO however found the aforesaid Explanation to be of a general nature without mentioning therein the reasons for the fall in the g.p. He also n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration. According to the learned counsel the decision of the Calcutta High Court in the case of Howrah Trading Co. (P) Ltd. relied upon by the ITO was not applicable to the facts of the present case. He finally made an impassioned plea for the treading results to be accepted in toto. The learned Departmental Representative on the other hand strongly supported the orders of the authorities below. 22. We have examined the rival submissions and have also perused the orders of the authorities below. It is an accepted fact that the state of the books of accounts and the records maintained by the assessee remain the same as in the earlier assessment years. It is also an accepted fact that the book results have been accepted all along in the past and even at g.p. rates lower to the one as disclosed in the assessment year under consideration. It is also an admitted fact that the assessee is not dealing in loose tea but sells the same in sealed boxes. As observed by the ITO the quantitative tally in boxes was furnished during the course of the assessment proceedings. In our opinion, it is not possible to maintain a static g.p. rate from year to year since this primarily depe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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