COMMISSIONER OF INCOME-TAX vs. TELEVISION & COMPONENTS PVT. LTD.

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ITR/265/1994HC GujaratGJHC24020341199413 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. The Supreme Court had approved the view expressed by the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43B, including its proviso, to mean that a liability 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 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 under Section 256(1) of the Income Tax Act, 1961. The appeal before the High Court concerned an order passed by the Income Tax Appellate Tribunal (ITAT), Ahmedabad. The specific issue revolved around the deductibility of unpaid sales tax liability. The ITAT had ruled in favour of the assessee, Television & Components Pvt. Ltd., on this matter. The assessment year(s) are not explicitly stated in the provided text, nor is the exact amount in dispute.

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 due date of filing of the return under Section 139(1) of the Income Tax Act, an addition cannot be made invoking the provisions of Section 43B? Assessee's Contention: The judgment does not explicitly record the assessee's contentions. However, the ITAT's decision, which is being reviewed, implies that the assessee argued for the deductibility of the sales tax liability if paid before the due date for filing the return. Revenue's Contention: The judgment does not explicitly record the Revenue's contentions. However, the Revenue's act of referring the question to the High Court suggests they contended that the addition made under Section 43B was justified, irrespective of the payment date 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. 265 of 1994

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 TELEVISION & COMPONENTS PVT. LTD. ---------------------------------------------------------- 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 unpaid sales tax liability is paid before the due date of filing of the return u/s. 139 (1) of Income Tax Act addition cannot be made invoking the provisions of sec. 43B ?" 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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