COMMISSIONER OF INCOME-TAX vs. H C TRADERS

ITR/136/1994HC GujaratGJHC24020213199403 October 2005Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI3 pages
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What were the facts?

The Income Tax Reference No. 136 of 1994 was filed by the Commissioner of Income-tax (applicant-revenue) against H.C. Traders (respondent-assessee). The assessment year in question is 1984-85, corresponding to the accounting period Samvant Year 2039. The reference was made by the Income-tax Appellate Tribunal, Ahmedabad Bench 'A', at the instance of the revenue. The dispute concerns the applicability of Section 43B of the Income-tax Act, 1961, to unpaid sales tax liability pertaining to the last quarter of the accounting year, if paid within the time stipulated for filing the return under Section 139(1). The revenue is challenging the Tribunal's decision to delete the disallowance made by the Income Tax Officer.

What did the High Court hold?

The High Court held that the Appellate Tribunal was right in law in deleting the disallowance made by the Income Tax Officer on account of unpaid sales tax by applying Section 43B of the Act. The reasoning was based on the ratio of the Supreme Court's decision in Allied Motors (P.) Ltd. Vs. Commissioner of Income-tax, [1997] 224 ITR 677 (S.C.). The principle established is that if a statutory liability, such as sales tax, pertaining to the last quarter of the accounting year is paid within the due date for filing the income-tax return under Section 139(1), then Section 43B, which disallows deductions for such liabilities unless paid within the previous year, is not applicable. The question referred to the Court was answered in the affirmative, meaning in favour of the assessee and against the revenue. The reference was disposed of accordingly, with no order as to costs.

What were the issues?

1. Whether, the Appellate Tribunal is right in law and on facts in holding that if the unpaid sales tax liability pertaining to the last quarter is paid within the time stipulated for filing of return u/s 139(1) the provisions of section 43B cannot be made applicable? Contentions: Assessee: No appearance recorded. Revenue: Ms. M.M. Bhatt, learned Standing Counsel, fairly pointed out that the controversy is concluded by the Apex Court's decision in Allied Motors (P.) Ltd. Vs. Commissioner of Income-tax, [1997] 224 ITR 677 (S.C.).

Which sections of the Income-tax Act were involved?

Section 43B,Section 139(1),Section 256(1)

AI-generated summary — verify with the full judgment below

ITR/136/1994 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No.136 of 1994 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MS.JUSTICE H.N.DEVANI ===================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ===================================================== COMMISSIONER OF INCOME-TAX - Applicant(s) Versus H C TRADERS - Respondent(s) ===================================================== Appearance : MS MM BHATT for Applicant(s) : 1, NOTICE SERVED for Respondent(s) : 1, ===================================================== CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 03/10/2005 ORAL JUDGMENT (Per : HONOURABLE MS.JUSTICE H.N.DEVANI)

1.

The Income-tax Appellate Tribunal, A

The order continues below.

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