Section 43B deduction for sales tax paid before return filing upheld under retrospective first proviso

Sales tax collected for the last quarter and paid before filing the return was treated as deductible under section 43B of the Income-tax Act, as the first proviso was applied retrospectively. On that basis, the Tribunal was justified in deleting the addition, because the allowance could not be characterised as erroneous or prejudicial to the Revenue merely due to an alternative view on interpretation. The deletion of the addition was upheld and the issue was answered against the Revenue.

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Issues: Whether the Tribunal was justified in deleting the addition of sales tax under section 43B of the Income-tax Act, 1961, where the sales tax collected had not been paid before assessment but was paid before filing of the return.

Analysis: The assessment year involved was 1984-85. The dispute turned on the interpretation of section 43B of the Income-tax Act, 1961, and its first proviso. The legal position applied was that, on the authority governing the point, sales tax relatable to the last quarter and paid before filing of the return for the relevant assessment year is deductible, and the first proviso operates retrospectively. In that view, the Income-tax Officer's allowance of the claim could not be treated as erroneous or prejudicial to the interests of the Revenue merely because an alternative interpretation was possible.

Conclusion: The deletion of the addition was upheld and the question was answered against the Revenue.

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