COMMISSIONER OF INCOME-TAX vs. HUETONE PAINTS & CHEMICALS IND

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ITR/214/1993HC GujaratGJHC24021260199313 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's case, the High Court, while interpreting Section 43-B, held that the proviso related back to the commencement of Section 43-B (April 1, 1984). Consequently, a liability would be allowable as a deduction if the assessee proved 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 High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue.

What were the facts?

The Commissioner of Income-tax (Revenue) referred a question of law to the High Court of Gujarat at Ahmedabad concerning an Income Tax Appellate Tribunal (ITAT) decision. The ITAT had allowed a deduction of Rs. 7521/- to the assessee, Huetone Paints & Chemicals Ind. The deduction was for unpaid sales tax, which the ITAT found was paid by the assessee before the due date for filing the income tax return. The assessment year(s) are not specified in the judgment. The procedural history involves the ITAT's order allowing the deduction, which the Revenue challenged by seeking a reference to the High Court under Section 256(1) of the Income Tax Act.

What were the issues?

1. Whether the Tribunal is right in law and on facts in allowing deduction of Rs. 7521/- in receipt of unpaid sales tax on the ground that the assessee had paid the same before the due date for filing the returns? (Question of law and fact, concerning Section 43-B of the Income Tax Act). Assessee's Contention: The judgment does not explicitly record the assessee's arguments before the High Court. However, the ITAT's decision, which is being upheld, implies the assessee argued that payment of the sales tax liability before the due date for filing the return makes it an allowable deduction. Revenue's Contention: The Revenue, by seeking the reference, contended that the ITAT was not right in law and on facts in allowing the deduction of unpaid sales tax merely because it was paid before the due date for filing the returns.

Which sections of the Income-tax Act were involved?

Section 43-B,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. 214 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 HUETONE PAINTS & CHEMICALS IND ---------------------------------------------------------- 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 Tribunal is right in law and on facts in allowing deduction of Rs. 7521/- in receipt of unpaid sales tax on the ground that the assessee had paid the same before the due date for filing the returns ?" 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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