TaxTMI 
TaxTMI 
1993 (6) TMI 249
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....ited the sales-tax payment in a separate sales-tax account, the provisions of section 43B of the income-tax Act, 1961 would not be applicable in the case? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the provisions of section 43B of the Income-tax Act, 1961 would not be applicable in the case and thereby deleting the addition of Rs. 77,439 made under that section? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the Commissioner of Income-tax (Appeals)'s order directing the Assessing Officer to allow the deduction of Rs. 1,23,704 on account of sales-tax?" 2. The assessee is a limited company....
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....e payment made being Rs. 17,67,781, there was an excess payment of Rs. 1,23,704 during the year. It was also stated that in the immediately preceding year of account an amount of Rs. 2,26,629 was disallowed and the excess payment made this year of Rs. 1,23,704 was attributable to the said figure of Rs. 2,26,629. Since the said sum was disallowed in the previous year, the assessee was entitled to a revenue deduction in respect of the sum of Rs. 1,23,704. Further, the addition of Rs. 77,439 made by the ITO should also be deleted. The Commissioner (Appeals) accepted the arguments advanced on behalf of the assessee and directed the ITO to allow deduction of Rs. 1,23,704 and also to delete the addition of Rs. 77,439. Before the Tribunal, the ....
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....y ground that sales-tax forms part of the turnover. It was also found that the amount added back in the last assessment year under the head 'Sales-tax' is larger than the amount of Rs. 1,23,704. The Commissioner (Appeals) was justified in directing the ITO to allow the said amount as a revenue deduction. 6. We have heard the rival contentions. The Tribunal has supported the assessee's contention that where the assessee does not debit the sales-tax to the profit and loss account by way of any provision but credits the sales- tax collection and debits the payment thereof in a separate sales-tax account, liability, thus, appearing in the balance sheet, the provisions of section 43B cannot have application. It is not permissible ....
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....n of the counsel for the revenue that it is immaterial whether the assessee brings the sales-tax collection to its sales account or not. Therefore, where the assessee credits the sales- tax collection and debits the payments thereof in a separate account maintained for sales-tax, the inherent effect is that the collection is being credited and at once debited to the profit and loss account by way of provision. It is of no effect that such credit of the collection as well as the debit of the provision of the equivalent amount is invisible. The crediting and debiting the suspense account merely hide the true nature of the transaction. 10. Therefore, we answer the first question in the negative and against the assessee. The other two questi....