COMMISSIONER OF INCOME TAX vs. I S P L INDUSTRIES LTD

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ITR/278/1993HC GujaratGJHC24021305199313 April 1998Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE KUNDAN SINGH2 pages
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What did the High Court hold?

The High Court held that the Appellate Tribunal was right in law and on facts. The question referred to the Court was concluded by the Supreme Court's decision 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, it was held that the proviso to Section 43B related back to the date of its operation (April 1, 1984). Consequently, such 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 question is answered in the affirmative, in favour of the assessee and against the Revenue. The reference stands disposed of accordingly.

What were the facts?

This case involves an Income Tax Reference No. 278 of 1993 before the High Court of Gujarat at Ahmedabad. The Commissioner of Income Tax (Revenue) is the petitioner, and ISPL Industries Ltd. is the assessee. The matter was referred to the High Court by the Income Tax Appellate Tribunal, Ahmedabad, under Section 256(1) of the Income Tax Act. The core of the dispute concerns the deductibility of unpaid sales tax liability. The procedural history is limited to the Tribunal referring a specific question of law to the High Court for its opinion.

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 time stipulated to file the return under Section 139(1), the provision of Section 43B cannot be invoked? Assessee's Contention: The judgment does not explicitly record the assessee's specific arguments, but the outcome indicates their position was that payment before the due date for filing the return under Section 139(1) allows for the deduction, notwithstanding Section 43B. Revenue's Contention: The judgment does not explicitly record the Revenue's specific arguments, but their appeal against the Tribunal's order implies they contended that Section 43B should be invoked, disallowing the deduction even if paid before the return filing due date.

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. 278 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? 1 to 5 : NO ---------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus I S P L INDUSTRIES LTD ---------------------------------------------------------- Appearance: MR MIHIR JOSHI with MR M R BHATT for Petitioner MR BD KARIA & MR R.K PATEL for the Assessee ----------------------------------------------------------

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 time stipulated to file the return under section 139 (1) the provision of section 43B cannot be invoked ? 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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