Appeal decision on section 43B deductions: Some disallowed, some allowed

The appeal involved contesting the deletion of an addition made under section 43B. The Tribunal upheld the disallowance of certain amounts in line with previous court decisions, allowing deductions in the year of payment as per section 43B. However, for payments made within due dates, it was held that Explanation 2 to section 43B does not apply to clause (b) of section 43B, leading to the deletion of disallowance by the CIT(A) in those instances. The Revenue's appeal was partly allowed for statistical purposes.

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Issues Involved: Appeal against deletion of addition made u/s 43B of Rs. 98,227.

Summary:
The fourth ground of appeal contested the deletion of the addition made u/s 43B. The learned DR argued that the CIT's decision contradicted the Tribunal's Special Bench decision in Rishi Roop Chemical Co. (P.) Ltd. v. ITO [1991] 36 ITD 35 (Delhi). Conversely, the counsel for the assessee cited the Patna High Court's ruling in Jameshedpur Motor Accessories Stores v. Union of India [1991] 91 CTR (Pat.) 19, asserting that the proviso to section 43B introduced by the Finance Act of 1987 should be applied retrospectively. While acknowledging the Delhi High Court's stance in Singhvi Motors (P.) Ltd., it was argued that this decision should only apply to certain taxes, not provident fund contributions. The insertion of Explanation 2 to section 43B with retrospective effect was highlighted, with the contention that it does not apply to clause (b) of section 43B. The details of payments made within the stipulated time were presented, leading to the plea that no disallowance u/s 43B was warranted.

In response to the above contention, the learned DR argued that the definition of 'sum payable' under Explanation 2 to section 43B should be uniformly interpreted for all clauses. Upon careful consideration of the arguments, the Tribunal examined the expenditure details related to various taxes and contributions. Following the decisions of the Delhi High Court and the Tribunal's Special Bench, the disallowance of certain amounts was upheld, subject to deduction being allowed in the year of payment as per section 43B. However, for items where payments were made within due dates, it was held that Explanation 2 to section 43B does not apply to clause (b) of section 43B, thus confirming the deletion of disallowance by the CIT(A) in those cases.

For statistical purposes, the appeal of the Revenue was partly allowed.

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