COMMISSIONER OF INCOME TAX vs. CONTINENTAL HEALDS MFG.PVT.LTD

ITR/119/1995HC GujaratGJHC24022444199507 November 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court answered both questions in the affirmative, in favour of the assessee. For the first question, the Court followed the Apex Court's decision in Allied Motors (P.) Ltd. vs. C.I.T., holding that if unpaid sales tax and central sales tax liability is paid on or before the due date for furnishing the return of income under section 139(1), no addition can be made under Section 43B. For the second question, the Court upheld the Tribunal's decision that the amount of Rs. 2,673/- on account of unpaid provident fund, family pension fund, and employees state insurance liability would be an allowable deduction and Section 43B would not be applicable if the sum was paid on or before the due date as defined in the Explanation below clause (va) of sub-section (1) of Section 36. The reasoning was based on the scheme of Section 43B read with Section 36(1)(va) and the ratio of the Allied Motors case. The operative direction was to answer the questions in favour of the assessee.

What were the facts?

This case involves an Income Tax Reference filed by the revenue (Commissioner of Income Tax) against the assessee, Continental Healds Mfg. Pvt. Ltd., for the assessment year 1984-85. The Income Tax Appellate Tribunal had made a reference to the High Court on two questions of law. The revenue challenged the Tribunal's decision regarding the disallowance of certain liabilities. The assessee was served but did not appear before the High Court. The High Court heard the counsel for the revenue and disposed of the reference.

What were the issues?

The Tribunal had to decide two questions referred by the revenue: 1. Whether the Tribunal was right in holding that if unpaid sales tax and central sales tax liability is paid on or before the due date for furnishing the return of income under section 139(1), no addition can be made invoking the provisions of Section 43B of the Act. 2. Whether the Tribunal was right in directing the Assessing Officer not to make an addition under section 43B in respect of Rs. 2,673/- on account of unpaid P.F., F.P.F. and E.S.I. liability if the said sum has been paid on or before the due date as defined in the explanation below clause (va) of sub-section (1) of section 36. The revenue contended that additions should be made under Section 43B for these unpaid liabilities. The assessee's contentions are not recorded as they did not appear. The Tribunal's decisions, which are under challenge, were based on the ratio of the Apex Court in Allied Motors (P.) Ltd. vs. C.I.T. and its own decision in CIT vs. Chandulal Venichand.

Which sections of the Income-tax Act were involved?

Section 43B,Section 139(1),Section 36(1)(va)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 119 of 1995

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge? : NO

The order continues below.

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