COMMISSIONER OF INCOME TAX vs. KAILASH TEA CO.

PDF · subscribers
ITR/318/1993HC GujaratGJHC24021332199313 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 Hon'ble Supreme Court in Allied Motors (P) Limited vs. C.I.T., reported in 224 ITR 677. This Supreme Court decision approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand, reported in 209 ITR 7. In Chandulal Venechand's case, the High Court had interpreted Section 43-B, including its proviso, to mean that a liability incurred in a previous year 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 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 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 passed by the Income Tax Appellate Tribunal (ITAT), Ahmedabad. The assessee is Kailash Tea Co. The specific assessment year(s) are not explicitly stated, nor is the amount in dispute. The procedural history involves the ITAT making a reference to the High Court on a question concerning the allowability of unpaid sales tax liability as a deduction.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in holding that if unpaid sales tax liability is paid before the due date of filing of the return under Section 139(1) of the Income Tax Act, addition cannot be made invoking the provision of Section 43-B? Assessee's Contention: The judgment does not record specific contentions made by the assessee before the High Court. However, the question referred implies the assessee's position was that payment before the due date of filing the return under Section 139(1) makes the liability deductible. Revenue's Contention: The judgment does not record specific contentions made by the Revenue before the High Court. However, the reference itself indicates the Revenue's disagreement with the ITAT's finding, implying they argued that the addition was justified under Section 43-B.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No. 318 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 KAILASH TEA CO. ---------------------------------------------------------- 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 unpaid sales tax liability is paid before the due date of filing of the return under Section 139 (1) of the Income Tax Act, addition cannot be made invoking Act, addition cannot be made invoking the provision of Section 43-B ?" 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.

****

Prakash*

More judgments on Section 256(1)

All 755 judgments and leading authorities on Section 256(1) →

Recent GST High Court judgments

Search GST case law →