TaxTMI 
TaxTMI 
2008 (2) TMI 337
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....ertaining to disallowance of sales tax payments made by the assessee. In the accounting year relevant for the assessment year 1994-95, the assessee which was following the mercantile system of accounting, made additional payment of Rs.23 lakhs towards sales tax payable for April 1994. Since it was specifically stated in the statement of accounts accompanying the return that the amount paid was towards sales tax payable for April 1994, the Assessing Officer disallowed the claim and computed tax liability. The assessee objected against disallowance under Section 143 (1)(a) of the Act by filing a rectification application under Section 154 of the Act which was rejected by the Assessing Officer. In the appeal filed against this order, the CIT (....
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....e under this Act in respect of— (a) any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or (b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, or (c)any sum referred to in clause (ii) of sub-section(1) of section 36, or (d) any sum payable by the assessee as interest on any loan or borrowing from any public financial institution or a State financial corporation or a State industrial investment corporation, in accordance with the terms and conditions of the agreement governing such loan or borrowing, or (e) any sum....
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....fteen days from the due date". 3. It is not in dispute that sales tax liability of the assessee is an allowable deduction in the computation of income from business by virtue of Section 29 read with Section 37(1) of the Income Tax Act. Among other things it is stated in Section 145 of the Income Tax Act that income chargeable under the head "profits and gains of business or profession" should be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. The assessee is admittedly following the mercantile system of accounting and therefore, sales tax liability like any other liability should be claimed and allowed on mercantile basis. In other words, liability of the relevant previous ye....
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....ll still be inadmissible under Section 43B if it is not paid on or before the end of the relevant previous year or at least before date of filing of the return. Therefore, Section 43B is only supplementary to Section 145 and it is only an additional condition for allowance of deductions otherwise allowable under the other provisions of the Act. The scheme of payment of sales tax under the Sales Tax Act of the State is to remit tax due for every month on or before the 10^th of the succeeding month. The only exception to this is the payment of advance tax for the last month of the financial year on or before 30^th of March. Therefore, the liability towards sales tax for an assessee is the tax payable along with monthly returns and final retur....
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....ous year or payable in that year, the assessee is not entitled to claim deduction under Section 29 read with Section 37(1) and Section 145 of the Income Tax Act. As already held, Section 43B in itself does not help the assessee to claim deduction as it is only an additional condition for allowing deduction which is otherwise admissible under the provisions of the Act. 4. The next question to be considered is whether the Assessing Officer was justified in disallowing the claim and computing tax liability under Section 143(1)(a) of the Act. Even though the C.I.T.(Appeals) and the Tribunal held that the question whether the amount payable by the assessee in the previous year being sales tax liability is a debatable issue which cannot be dec....