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C.I.T. v. M/S Uptron Powertronics Ltd - INCOME TAX REFERENCE No. 15 of 1995  RD-AH 1089 (19 April 2005)
I.T.R. No.15 of 1995
The Commissioner of Income-tax, Meerut v. M/s. Uptron Powertronics Ltd., S-53 to 55, Uptron Estate, Sahibabad.
Hon'ble R.K.Agrawal, J.
Hon'ble Rajes Kumar, J.
The Income Tax Appellate Tribunal, Delhi has referred the following question of law under Section 256(1) of the Income Tax Act, 1961, hereinafter referred to as "the Act" for opinion to this Court.
"Whether, on the facts and in the circumstances of the case the Tribunal was correct in confirming the order of the CIT(Appeals) by deleting the addition of Rs.6,45,047/- made under section 43-B of the Income Tax Act, 1961"
The present Reference relates to the Assessment Year 1985-86.
Briefly stated the facts giving rise to the present Reference are as follows:-
The respondent-assessee has been assessed to income tax in the status of a company. Its accounting period ended on 31st December, 1984. It is engaged in manufacture of power plant, float rectifiers, battery chargers, switching cubicles microwave power plants, mobile rectifiers, inverters, float chargers, air compressors, etc. It filed its return on 28th June, 1985 declaring income of Rs.10,60,259/-. Thereafter a revised return declaring income at Rs.9,74,933/- was filed on account of claim of expenses relating to the financial year ending on 31st December, 1984, which has been debited to the accounts of subsequent assessment years. The Assessing Officer completed the assessment under Section 143(3) of the Act and computed the assessee's total income at Rs.16,49,120/-. While doing so, the Assessing Officer made an addition of Rs.6,45,037/- by disallowance under Section 43-B of the Act. The aforesaid amount of Rs.6,45,037/- comprises the following items:-
As per tax audit report 14,151/-
PF Payable 16,702/-
Central Sales Tax payable 4,64,802/-
EFPF payable 2,566/-
Local SalesTax payable 43,125/-
Surcharge payable on local
sales-tax 154/- 5,48,290/-
According to the respondent-assessee, cheques of Rs.89,689/- Rs.638/- and Rs.19,000/- on account of Central Sales Tax, Local Sales-tax and gratuity payments respectively were issued for payment but the same were not presented as on 31st December, 1984, i.e. which was the last date of the accounting period of the respondent-assessee. Since these payments were not made as on the date of closing of accounts, they were treated as unpaid amounts and were not allowed as according to the Assessing Officer mere issuing of cheques does not amount to actual payment thereof . He had also issued a show cause notice calling upon the respondent-assessee to show cause as to why the Sales Tax may not be disallowed under section 43-B of the Act. The respondent-assessee submitted its explanation in which it was mentioned that unpaid liability for sales tax collected from the customers does not fall under the purview of Section 43-B of the Act. As per accounting practice adopted by the respondent-assessee, sales tax collected from the customers is credited to a separate account and all the payments to Sales Tax Department are debited to this account and no such amount under this head is charged to profit and loss account. According to the respondent-assessee, Section 43-B is attracted only on those statutory payments which have been charged to profit and loss account and for which deduction has been claimed but the amount remains unpaid at the end of the financial year. The Assessing Officer did not accept the explanation offered by the respondent-assessee and treated the entire unpaid amount as income by taking resort to Section 43-B of the Act. The Assessing Officer was of the view that even though the amount was not claimed as deduction in the profit and loss account, such collections represent the trading receipt and the method of accounting does not make any difference. Feeling aggrieved, the respondent-assessee preferred an appeal before the Commissioner of Income Tax (appeals). The Commissioner of Income Tax (Appeals) allowed and appeal and has directed that a sum of Rs.5,93,088/- + Rs.19,000/-, which has been paid during the statutory period after verification should be allowed as deduction. The order of Commissioner of Income Tax (appeals) has been upheld by the Tribunal.
We have heard Sri Shambhu Chopra, learned Standing Counsel for the Revenue. Nobody has appeared on behalf of the respondent-assessee.
It may be mentioned here that even though the amount mentioned in the question of law referred to was Rs.6,45,047/- but the real amount involved in the present Reference is only Rs.6,12,088/-. In view of the findings recorded by the Commissioner of Income Tax(Appeals), which has been affirmed by the Tribunal that the amount in question had been paid over to the Government Departments with the statutory period even though it fell under subsequent assessment year the principle laid down by the Apex Court in the case of Allied Motors Pvt. Ltd. v. C.I.T., (1997)224 ITR 677 is fully applicable to the facts of the present case. We answer the question referred to us in the affirmative i.e. in favour of the assessee and against the Revenue with the observation that the amount of Rs.6,45,088/- be reduced as Rs.6,12,088/- However, there shall be no order as to costs.
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