COMMISSIONER OF INCOME TAX vs. NUFORM INDUSTRIES

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ITR/312/1992HC GujaratGJHC24015652199213 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 decision of 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 43B to relate back to the commencement of Section 43B (April 1, 1984). It was held that such a sales tax liability would be allowable as a deduction if the assessee proved 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 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?

The Commissioner of Income Tax (Revenue) referred a question of law to the High Court of Gujarat at Ahmedabad under Section 256(1) of the Income Tax Act, 1961. The reference arose from an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad. The specific facts leading to the dispute are not detailed in the judgment, but it concerns the deductibility of outstanding sales tax liability pertaining to the last quarter of a financial year. The core of the dispute revolves around whether Section 43B of the Income Tax Act can be invoked by the Income Tax Officer (ITO) if this liability is paid within the time allowed for filing the return of income under Section 139(1). The amount in dispute is not specified.

What were the issues?

1. Whether, as a question of law and fact, the appellate Tribunal is right in holding that if the outstanding sales tax liability pertaining to the last quarter is paid within the time allowed under Section 139(1) of the Income Tax Act, the provisions of Section 43B cannot be invoked by the ITO? The Revenue's contention is implicitly that Section 43B should be invoked, disallowing the deduction in the year the liability was incurred, irrespective of the subsequent payment within the extended period. The Assessee's contention, as upheld by the Tribunal, is that payment within the Section 139(1) due date makes the deduction allowable. The Tribunal's decision relied on the interpretation of Section 43B and its proviso. The judgment does not explicitly detail the arguments presented by the Revenue before the High Court, but it notes that the question referred to the Court was concluded by a Supreme Court decision.

Which sections of the Income-tax Act were involved?

Section 256,Section 43B,Section 139(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No. 312 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 NUFORM INDUSTRIES ---------------------------------------------------------- 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 outstanding sales tax liability pertaining to the last quarter is paid within the time allowed u/s. 139 (1) of the I.T Act the provisions of Section 43B cannot be invoked by the ITO ? "

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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