COMMISSIONER OF INCOME TAX vs. KHIMJI VISHRAM AND SONS GUJ P LTD

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ITR/339/1993HC GujaratGJHC24021345199313 April 1998Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE KUNDAN SINGH2 pages
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What did the High Court hold?

The High Court held that the question referred to it stands concluded by the decision of the Hon'ble 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 Section 43B, including its proviso, to mean that a liability would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the Tribunal was correct in its holding. The question is answered in the affirmative, in favour of the assessee and against the Revenue. The reference stands disposed of accordingly.

What were the facts?

This case involves an Income Tax Reference No. 339 of 1993 before the High Court of Gujarat at Ahmedabad. The Commissioner of Income Tax (Revenue) is the petitioner, and Khimji Vishram and Sons Guj P Ltd (Assessee) is the respondent. The Income Tax Appellate Tribunal, Ahmedabad, had referred a specific question of law to the High Court for its opinion. The assessment year(s) are not explicitly stated but pertain to the period when Section 43B of the Income Tax Act was in effect, particularly concerning unpaid sales tax liability. The core of the dispute revolves around the deductibility of unpaid sales tax liability for the last quarter of a financial year if paid before the due date for filing the income tax return.

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 43B cannot be made applicable? The Revenue's contention, implied by the reference of the question, is that Section 43B should be applicable, disallowing the deduction for the unpaid sales tax liability in the relevant previous year. The Assessee's contention, as upheld by the Tribunal and subsequently by the High Court, is that if the sales tax liability incurred in the last quarter is paid before the due date for filing the return under Section 139(1) for that previous year, the deduction should be allowed. The Tribunal's view, which the High Court is asked to examine, is that Section 43B's applicability is negated under these specific payment circumstances.

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. 339 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 KHIMJI VISHRAM AND SONS GUJ P LTD ---------------------------------------------------------- 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 139 (1) the provisions 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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