COMMISSIONER OF INCOME TAX vs. DEEPAK ENGINEERING SYNDICATE

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ITR/276/1993HC GujaratGJHC24021303199313 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 question referred to it stands concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The Court noted that 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 Section 43B, including its proviso, to mean that a liability incurred in a previous year would be allowable as a deduction if it was actually paid before the due date for furnishing the return of income under Section 139(1) for that relevant previous year. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

What were the facts?

This case involves an Income Tax Reference filed by the Commissioner of Income Tax (Revenue) against Deepak Engineering Syndicate (Assessee) before the High Court of Gujarat. The reference was made by the Income Tax Appellate Tribunal, Ahmedabad, concerning assessment years not explicitly stated in the judgment. The core issue revolves around the applicability of Section 43B of the Income Tax Act, 1961, to unpaid sales tax liability pertaining to the last quarter of a financial year. The Revenue is challenging the Tribunal's decision that if such liability is paid within the time stipulated for filing the return under Section 139(1), Section 43B would not apply.

What were the issues?

1. Whether, as a matter of law and fact, the Appellate Tribunal is correct 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 43B cannot be made applicable? Assessee's Contention: The judgment does not record specific arguments made by the assessee. However, the outcome indicates the assessee's position aligns with the Tribunal's view. The assessee would likely rely on the interpretation that payment before the due date of the return satisfies the condition for deductibility, as per the proviso to Section 43B. Revenue's Contention: The judgment does not record specific arguments made by the Revenue. However, the Revenue is challenging the Tribunal's affirmative finding, implying they likely argued for a stricter interpretation of Section 43B, potentially disallowing the deduction if the liability was not paid within the previous year.

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

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No. 276 of 1993

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 DEEPAK ENGINEERING SYNDICATE ---------------------------------------------------------- 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 proisions of section 43B 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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Prakash*

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