COMMISSIONER OF INCOME TAX vs. SAURASHTRA INSECTISIDES & FERTILIZERS,

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ITR/328/1992HC GujaratGJHC24015668199213 April 1998Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE KUNDAN SINGH2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the Appellate Tribunal was right in law and on facts. The Court's decision was based on the settled legal position established by the Supreme Court in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted the proviso to Section 43-B to mean that it related back to the date Section 43-B came into operation (April 1, 1984). Consequently, a sales tax liability incurred in a previous year would be allowable as a deduction if the assessee proved it was paid before the due date for furnishing the return of income under Section 139(1) for that relevant previous year. Therefore, the question referred to the Court was answered in the affirmative, in favour of the assessee and against the Revenue.

What were the facts?

This case involves an Income Tax Reference No. 328 of 1992 before the High Court of Gujarat at Ahmedabad. The reference was made by the Income Tax Appellate Tribunal (ITAT), Ahmedabad, concerning the assessment of Saurashtra Insecticides & Fertilizers. The core issue revolves around the deductibility of unpaid sales tax liability for the last quarter of a financial year. The Revenue is the petitioner (Commissioner of Income Tax), and the assessee is Saurashtra Insecticides & Fertilizers. The specific assessment year(s) are not explicitly stated, but the dispute concerns the application of Section 43-B of the Income Tax Act, 1961.

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 under Section 139(1), the provisions of Section 43-B cannot be made applicable? (Question of law and fact, concerning Section 43-B and Section 139(1) of the Income Tax Act, 1961). Assessee's Contention: The assessee argues that if the sales tax liability for the last quarter is paid before the due date for filing the income tax return under Section 139(1), it should be allowed as a deduction. This implies that the proviso to Section 43-B, allowing deduction upon payment before the due date of filing the return, should apply. Revenue's Contention: The Revenue's stance, implied by their challenge to the Tribunal's order, is that the unpaid sales tax liability for the last quarter should not be allowed as a deduction, even if paid before the return filing due date, suggesting a strict interpretation of Section 43-B or its inapplicability in this scenario.

Which sections of the Income-tax Act were involved?

Section 43-B,Section 139(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No. 328 of 1992

For Approval and Signature:

Hon'ble MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE KUNDAN SINGH

======================================================== 1. Whether Reporters of Local Papers may be allowed to see the judgements?

2.

To be referred to the Reporter or not?

3.

Whether Their Lordships wish to see the fair copy of the judgement?

4.

Whether this case involves a substantial question 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?

---------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus SAURASHTRA INSECTISIDES & FERTILIZERS, ---------------------------------------------------------- Appearance: MR MIHIR JOSHI with MR M R BHATT for Petitioner SERVED BY RPAD - (N) for Respondent No. 1 ----------------------------------------------------------

CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE KUNDAN SINGH Date of decision: 13/04/98

ORAL JUDGEMENT (Per : Abichandani, J.)

The Income Tax Appellate Tribunal, Ahmedabad has referred the following question for the opinion of this Court under Section 256 (1) of the Income Tax Act.

"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 under Section 139 (1) the provisions of section 43-B cannot be made applicable ?" The question referred to this Court now stands concluded by the decision of Hon'ble the Supreme Court in approved by the Supreme Court. In Chandulal Venechand's case, this Court while construing the provisions of Section 43-B had taken a view that the proviso to Section 43-B of the Act related back to the date when Section 43-B came into operation i.e., April 1, 1984. It was held that such liability would therefore be allowable as a deduction provided the assessee established that it was discharged by actual payment before the date applicable in his case for furnishing the return of income under Section 139 (1) of the Act in respect of relevant previous year in which the liability had been incurred. In view of this settled legal position, the question referred to this Court is answered in the affirmative in favour of the assessee and against the Revenue. The Reference stands disposed of accordingly with no order as to costs.

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