The main legal point established in the judgment is the retrospective application of the proviso to Sec. 43B of the Income-tax Act, 1961, allowing the assessee to claim deductions for sums paid before the due date applicable for furnishing the return of income.

1. . Whether the proviso to Sec. 43B of the Income-tax Act, 1961 (hereinafter called the "Act"), inserted by the Finance Act, 1987, with effect from April 1, 1988, shall apply to an assessment proceeding in respect of the assessment year 1984-85 is the question involved in this application.

2. The fact of the matter lies in a very narrow compass.

3. The petitioner is a partnership firm and is an assessee under the Act as a registered firm. The petitioner maintains its accounts under the accounting system which is commonly known as the mercantile system of accounting and its accounting year is from January to December. For the accounting year January to December, 1983, the petitioner filed a return under the Act on August 30, 1984. In its return, it showed a net taxable income of Rs. 4,30,970.

4. In pursuance of a notice issued by respondent No. 3, the petitioner produced its books of account. Respondent No. 3 found that the statutory dues payable during the accounting year on account of Bihar sales tax, additional sales tax, Central sales tax, provident fund and family pension amounting to Rs. 21,15,885 had not been paid by the petitioner; this amount was added to the net income of the petitioner under Sec. 43B of the Act. The order of assessment is contained in annexure-1 to the writ petition.

5. Dr. Pal, learned counsel appearing on behalf of the petitioner, firstly contended that Sec. 43B of the Act is ultra vires the Constitution.

6. Having regard to the decisions in Mysore Kirloskar Ltd. V/s. Union of India [1986] 160 ITR 50 (Kar) and Srikakollu Subba Rao and Co. V/s. Union of India [1988] 173 ITR 708 (AP), he, however, did not press the same, but submitted that Sec. 43B of the Act being a declaratory statute must be held to have retrospective operation as, otherwise, the same would be rendered ultra vires Article 14 of the Constitution.

7. Learned counsel submitted that it was never the intention of Parliament, by introducing Sec. 43B in the Act, not to give deduction of the amount also payable by an assessee by way of tax or by way of contribution to the provident fund or family pension scheme which has been paid within reasonable time after the expiry of the accounting year. He submitted that the correct interpretation of Sec. 43B is that if an assessee has paid the dues under the aforesaid account before the due date applicable to an assessee for furnishing the return of income under Sec. 139, the assessee shall be entitled to deduction of that amount. According to Dr. Pal, that that is the correct interpretation of Section 43B will appear from the statement of the Finance Minister made in Parliament and also the purpose for which this section was introduced when the Finance Bill for the insertion of this section was introduced in 1983.

8. Mr. Debi Prasad, learned standing counsel, Central Government, on the other hand, submitted that the proviso cannot be given a retrospective effect as the same has come into force with effect from April 1, 1988, and thus the petitioner cannot get any benefit thereunder.

9. Learned counsel contended that, on a plain reading of Sec. 43B of the Act, it would be evident that, in terms thereof, the petitioner is not entitled to claim any deduction on account of payment of sales tax as the said amount had not actually been paid by the assessee during the currency of the relevant accounting year.

10. Mr. Prasad submitted that Sec. 43B of the Act is intra vires the Constitution of India as has been held in Mysore Kirloskar Ltd. V/s. Union of India [1986] 160 ITR 50 (Kar) and in Srikakollu S. Subba Rao and Co. V/s. Union of India [1988] 173 ITR 708 (AP).

11. It was further submitted that the special leave petition filed against the judgment of the Karnataka High Court in Mysore Kirloskars case was dismissed by the Supreme Court of India on November 10, 1987.

12. Sec. 43B was inserted in the Act by the Finance Act, 1983, with effect from April 1, 1984. The section as it stood then rea