TMI Blog1986 (8) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... owed by the assessee and has been accepted by the Revenue. For the first time for the asst. yr. 1984-85, the ITO added sales-tax and sur-charge payable amounting to Rs. 2,904 to the income. This, he purported to do under s. 43B which was introduced w.e.f. 1st April, 1984. The assessee went in appeal. It was pleaded before the AAC that the amount does not come within the purview of s. 43B. The AAC held as follows: "Section 43B stipulates that the deduction otherwise allowable under this Act in respect of any sum payable by the assessee by way of tax or duty shall be allowed only in the previous year in which the amount is actually paid. In the instant case, I find that this amount of Rs. 2,904 has not been brought into the profit and loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the AAC should be reversed. 3. The ld. representatives of the assessee, however, submitted that s. 43B was not at all applicable to this case. The section refers to `any sum payable by the assessee by way of tax or duty under any law for the time being in force'. In the present case, the sales-tax collected in one month was payable only in the next month. The sum of Rs. 2,904 was not payable during the year. Therefore, s. 43B was not applicable. On the other hand, if the ITO held that the sum of Rs. 2,904 was to be added to the sales, the accrued liability of Rs. 2,904 had also to be deducted irrespective of s. 43B. Lastly, he submitted that according to the method of accounting regularly employed by the assessee, the sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st day of April, 1983 or any earlier assessment year) in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such sum in computing the income of the previous year in which the sum is actually paid by him." In the Memo. Explaining the provisions in the Finance Bill 1983, it is stated as follows: "59. Under the IT Act, profits and gains of business and profession are computed in accordance with the method of accounting regularly employed by the assessee. Broadly stated, under the mercantile system of accounting, income and out go are accounted for on the basis of accrued and not on the basis of actual disbursements or receipts. For the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave now to consider whether sales-tax collected in Oct., 1983 by the assessee could be added to the assessee's income but at the same time the corresponding deduction towards liability is to be denied. In CWT vs. Kantilal Manilal (1985) 151 ITR 447 (SC) the demand notice for the asst. yrs. 1960-61 1961-62 were served on the assessee on 11th April, 1961 and 11th April, 1962. The assessee filed appeals against the assessments. The WTO denied the assessee's claim for deduction of the tax liabilities as a debt owned on the valuation dates, since the assessee had challenged the levy in appeal. Reliance was placed on s. 2(m)(iii)(a) of the WT Act. The Court held that since the debt could not be said to be outstanding on the valuation dates, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant date instalments having been granted. In other words, the payability was determined in the light of the instalment scheme while the accrual of debt was determined in accordance with general principles. In our opinion, this case is of direct application to the assessee. It follows that unless there is an order or a rule to pay a tax by a particular date the tax was not 'payable'. It is immaterial that the assessee if he wants can pay tax before the due date. But the last date on which he is permitted to pay is to be taken as the date on which tax is payable for, beyond that date, he is considered to be in default. Since sales-tax collected in one month was payable only in the next month in accordance with the scheme of the Sales-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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