COMMISSIONER OF INCOME-TAX vs. NOORJAHAN MEHBOOBBHAI

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ITR/312/1993HC GujaratGJHC24021327199313 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 was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The Court also referred to its own earlier decision in C.I.T vs. Chandulal Venechand, which was approved by the Supreme Court. In Chandulal Venechand's case, the Court had interpreted Section 43B and 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 under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favor of the assessee and against the Revenue.

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, referred a question of law to the High Court of Gujarat concerning the deductibility of unpaid sales tax liability. The core issue was whether an addition could be made under Section 43B if the sales tax liability was paid before the due date for filing the income tax return under Section 139(1). The ITAT had ruled in favor of the assessee. The Revenue challenged this decision. The procedural history involves a reference made by the ITAT to the High Court under Section 256(1) of the Income Tax Act.

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 is paid before the due date for filing of return under section 139(1), an addition cannot be made invoking the provisions of section 43B? Assessee's Contention: The assessee contended that if the sales tax liability was paid before the due date for filing the return under Section 139(1), no addition should be made under Section 43B. This position was upheld by the ITAT. Revenue's Contention: The Revenue challenged the ITAT's decision, implying that the addition under Section 43B was justified despite the payment being made before the due date for filing the return.

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. 312 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 NOORJAHAN MEHBOOBBHAI ---------------------------------------------------------- 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 is paid before the due date for filing of return under section 139 (1), addition cannot be made invoking the provisions of section 43B ? " 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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