COMMISSIONER OF INCOME TAX vs. SUPER CAST ALLOY FOUNDRIES LTD

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ITR/310/1992HC GujaratGJHC24015650199213 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 High Court's own prior decision in C.I.T. vs. Chandulal Venechand, which was approved by the Supreme Court, had taken the view that the proviso to Section 43-B related back to the date Section 43-B came into operation, i.e., 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. The High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. No issue was left undecided.

What were the facts?

This case involves an Income Tax Reference filed by the Commissioner of Income Tax (Revenue) against Super Cast Alloy Foundries Ltd (Assessee) before the High Court of Gujarat. The reference was made by the Income Tax Appellate Tribunal, Ahmedabad, concerning Assessment Year 1984-85. The core of the dispute revolves around the retrospective application of a proviso inserted into Section 43-B of the Income Tax Act, 1961, by the Finance Act, 1987, effective from April 1, 1988. The Tribunal had held this proviso to be retrospective, impacting the allowance of certain deductions.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the proviso inserted in Section 43-B of the I.T. Act, 1961, by Finance Act, 1987, with effect from 1.4.1988, was retrospective in operation and applied to Assessment Year 1984-85 also? Assessee's Contention: The judgment does not record any specific contentions made by the assessee. The Tribunal's decision in favour of the assessee on the retrospective application of the proviso is the basis of the reference. Revenue's Contention: The Revenue, through the Commissioner of Income Tax, has challenged the Tribunal's finding that the proviso to Section 43-B is retrospective. The reference itself indicates the Revenue's disagreement with the Tribunal's interpretation.

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. 310 of 1992

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 SUPER CAST ALLOY FOUNDRIES 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, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that proviso insterted in Section 43-B of the I.T Act, 1961 by Finance Act, 1987 with effect from 1.4.1988 was retrospective in operation and applied to A.Y 1984-85 also ? "

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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