Section 43B deduction adjusted to prevent double allowance after fresh assessment

Section 43B deduction for the disputed amount was treated as allowable in assessment year 1986-87, following the earlier governing interpretation of that provision. To prevent a technical double allowance after fresh assessment for 1987-88, the Court used article 142 to adjust the later year by disallowing the same amount there while allowing the revised 1987-88 deduction, so the amount was claimed only once.

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Issues: Whether the deduction claimed under section 43B of the Income-tax Act, 1961, for assessment year 1986-87 was allowable, and whether the corresponding deduction for assessment year 1987-88 had to be adjusted to avoid double allowance.

Analysis: The amount of Rs. 1,40,86,821 was held allowable for assessment year 1986-87 in view of the earlier decision governing section 43B. To avoid a technical overlap arising from the fresh assessment for assessment year 1987-88, the Court directed under article 142 of the Constitution of India that the deduction of Rs. 1,40,86,821, though earlier allowed for 1987-88, be disallowed in that year while the deduction of Rs. 1,25,30,853 for 1987-88 be allowed, thereby ensuring that the disputed amount was claimed only in 1986-87.

Conclusion: The question of law was answered in favour of the assessee, and deduction under section 43B was allowed for Rs. 1,40,86,821 in assessment year 1986-87.

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