COMMISSIONER OF INCOME TAX vs. GUSTAD B ENGINEER

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ITR/289/1994HC GujaratGJHC24020365199413 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. (224 ITR 677). This Supreme Court decision had approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand (209 ITR 7). In Chandulal Venechand, the High Court had interpreted Section 43B, including its proviso, to mean that a sales tax 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 Tribunal's view was upheld. The question is answered in the affirmative in favour of the assessee and against the Revenue. No issue was expressly left undecided.

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, referred a question of law to the High Court of Gujarat. The case involves the Commissioner of Income Tax (Revenue) and Gustad B Engineer (Assessee). The core issue pertains to the applicability of Section 43B of the Income Tax Act concerning unpaid sales tax liability for the last quarter of a financial year. The Tribunal had held that if this liability was paid within the time stipulated for filing the return under Section 139(1), Section 43B would not be applicable. The High Court was asked to determine if the Tribunal's decision was correct in law and on facts.

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 pertaining to the last quarter is paid within the time stipulated for filing of return under section 139 (1), the provisions of section 43B cannot be made applicable? Assessee's Contention: The judgment does not explicitly record the assessee's arguments. However, the Tribunal's decision, which is being reviewed, implies the assessee argued that payment of sales tax liability within the extended period for filing the return under Section 139(1) should be considered a valid deduction under Section 43B, or that Section 43B's disallowance provision would not apply in such a scenario. Revenue's Contention: The judgment does not explicitly record the Revenue's arguments. However, by referring the matter to the High Court, the Revenue likely contended that the Tribunal erred in its interpretation of Section 43B and that the unpaid sales tax liability, even if paid within the Section 139(1) period, should be disallowed as a deduction for the year in which it was incurred, unless paid before the due date of the return.

Which sections of the Income-tax Act were involved?

Section 43B,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. 289 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 GUSTAD B ENGINEER ---------------------------------------------------------- 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 pertaining to the last quarter is paid within the time stipulated for filing of return under section 139 (1) the provisions of section 43B cannot be made applicable?" 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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