JUDGMENT B.A. Khan, J. 1. The Income-tax Appellate Tribunal has referred the following question for our opinion "Whether, on the facts and in the circumstances of the case, the Tribunal correctly construed Section 43B of the Income-tax Act, 1961, that when under the provisions of the relevant statute the sales tax though fallen due in the accounting year but was payable after the close of the accounting year it was not open to the Income-tax Officer to disallow the tax so payable and actually paid within the time allowed ?" 2. The assessee-firm's liability-to pay sales tax of Rs. 10,191 arose in the assessment year 1984-85. But the firm paid the amount within 30 days after the close of the accounting year as permitted by the Sales Tax Act and claimed deduction in the assessment year 1985-86. This was disallowed by the Income-tax Officer on the strength of Section 43B of the Act and was confirmed by the Appellate Assistant Commissioner in appeal also. 3. The assessee thereafter took appeal before the Tribunal which relying upon Srikakollu Subba Rao and Co. v. Union of India [1988] 173 ITR 708 (AP), held that Section 43B was not applicable and that the deduction claimed was wrongly disallowed. 4. The Revenue then sought reference and that is how we are seized of the matter. Though the issue stands squarely covered by the judgment of the Supreme Court in Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677, yet we deemed it appropriate to clarify the position briefly to eliminate scope for any future misconception. 5. Section 43B which is material for our purpose reads thus : "43B. Certain deductions to be only on actual payment.--Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable 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 ... Certain deductions to be only on actual payment.--Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable 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 ... shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in Section 28 of that previous year in which such sum is actually paid by him : Provided that nothing contained in this section shall apply in relation to any sum referred to in Clause (a) or Clause (c) or Clause (d) which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under Sub-section (1) of Section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return : Provided further . . . Explanation 1-- ... Explanation 2.--For the purpose of Clause (a), as in force at all material times, 'any sum payable' means a sum for which the assessee incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law." 6. Section 43B was inserted from April 1, 1984, and at that time it did not contain the two provisos. The first proviso was added by the Finance Act of 1987 which came into force from April 1, 1988. Explanation 2 was subsequently added by the Finance Act of 1989 but retrospectively from April 1, 1984. 7. Section 43B as it originally stood provided for deduction of the tax payable by the assessee only in the year in which it was actually paid and not in the year in which the assessee incurred the liability to pay such tax. It did not take into regard a situation where the liability to pay the tax arose in the previous year but the payment was allowed to be made by the statute within a prescribed time in the subsequent year also. It did not take into regard a situation where the liability to pay the tax arose in the previous year but the payment was allowed to be made by the statute within a prescribed time in the subsequent year also. To overcome this, the first proviso was added to Section 43B which provided that it will not apply in relation to any sum which is actually paid by the assessee in the next accounting year, if it is paid on or before the due date for furnishing the return of income in respect of the previous year in which the liability to pay such sum was incurred and the evidence of such payment is furnished by the assessee along with the return. 8. Having regard to this, the Tribunal was justified in holding that sec-lion 43B was not applicable because the assessee had actually paid the tax within the time prescribed by the statute though the liability arose in the previous accounting year. 9. It is not in dispute before us that the first proviso to the section which came into force from April 1, 1988, was not attracted to the case. But even if any such plea was raised, it stands covered by the Supreme Court judgment (supra) which has given deeming retrospective effect to the first proviso on the ground that it was inserted to remedy unintended consequences and to make Section 43B workable. 10. Thus we answer the reference against the Revenue by holding that the Income-tax Appellate Tribunal had correctly construed and interpreted the provisions of Section 43B and had rightly held it inapplicable to the case as the assessee had paid the sales tax within the prescribed time under the statute though after the close of the assessment year for which the liability arose.