COMMISSIONER OF INCOME TAX vs. ANIL DYESTUFF INDUSTRIES

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ITR/348/1993HC GujaratGJHC24021352199313 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 Supreme Court had approved the High Court's own view in C.I.T vs. Chandulal Venechand. In Chandulal Venechand, 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?

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. The assessee, Anil Dyestuff Industries, had unpaid sales tax pertaining to the last quarter of a previous year. The Revenue disputed the deductibility of this amount. The ITAT had held that if the unpaid sales tax was paid within the time prescribed for filing the return under Section 139(1) of the Income Tax Act, it was an allowable deduction and Section 43B would not apply. The High Court was asked to decide whether the ITAT's decision was legally and factually correct.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in holding that unpaid sales tax pertaining to the last quarter, if paid within the time prescribed for filing the return under Section 139(1), is an allowable deduction and Section 43B is not applicable. Assessee's Contention: The judgment does not record specific arguments made by the assessee before the High Court. However, the ITAT's decision, which the High Court is considering, implies the assessee argued that payment before the due date of the return under Section 139(1) satisfied the conditions for deduction, overriding the disallowance under Section 43B. Revenue's Contention: The judgment does not record specific arguments made by the Revenue before the High Court. However, the reference itself indicates the Revenue's disagreement with the ITAT's finding that Section 43B was not applicable in such cases.

Which sections of the Income-tax Act were involved?

Section 256(1),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. 348 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 ANIL DYESTUFF 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 the unpaid sales tax pertaining to the last quarter if paid within the time prescribed for filing the return u/s. 139 (1), the same was an allowable deduction and the provisions of Section 43B will not be applicable in such case ?" 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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