2003 (11) TMI 46

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....appellate authority. The assessment year is 1988-89. It is not in dispute that the amounts referred to in the question were paid before the due date as defined in the Explanation below clause (va) of sub-section (1) of section 36 of the Act. The Assessing Officer denied the deduction claimed, on the sole ground that the payment had not been made in the previous year although the payment had been made before the due date, the actual payment having been made after the close of the previous year. That view of the Assessing Officer has been affirmed by the Tribunal by reversing the order of the Commissioner, who had accepted the assessee's appeal. The Supreme Court in the case of Allied Motors Pvt. Ltd. v. CIT [1997] 224 ITR 677 consid....

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....ctions in that regard from their income on the ground that the liability to pay these amounts had been incurred by them in the relevant previous year. It was to stop this mischief that section 43B was inserted." The court went on to hold that: "It was clearly not realised that the language in which section 43B was worded, would cause hardship to those taxpayers who had paid sales tax within the statutory period prescribed for this payment, although the payment so made by them did not fall in the relevant previous year. This was because the sales tax collected pertained to the last quarter of the relevant accounting year. It could be paid only in the next quarter which fell in the next accounting year. Therefore, even when the sales tax h....

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....nsequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation, so that a reasonable interpretation can be given to the section as a whole." The object of section 43B was to ensure that the deduction claimed was in relation to an amount which had in fact been paid by the assessee and that the payment that is required to be made is made within the time allowed by the law. It would be clearly unjust to disallow deduction of such payment in the assessment of the income of the assessee. This injustice was realised by Parliament itself which deleted the re....