COMMISSIONER OF INCOME-TAX vs. SONYA CERAMICS

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ITR/404/1992HC GujaratGJHC24015744199213 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 Court referred to the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. and this High Court's earlier decision in C.I.T vs. Chandulal Venechand. In Chandulal Venechand, the Court had construed Section 43-B and its proviso, holding that a liability incurred in the last quarter of a previous year would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return under Section 139(1) for that relevant previous year. The Supreme Court had approved this view. Therefore, the question referred to the High Court was answered in the affirmative, in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

What were the facts?

This case involves an Income Tax Reference No. 404 of 1992 before the High Court of Gujarat at Ahmedabad. The Commissioner of Income-tax (Revenue) is the petitioner, and Sonya Ceramics (Assessee) is the respondent. The reference was made by the Income Tax Appellate Tribunal, Ahmedabad, concerning the assessment year(s) not explicitly stated but implied to be related to the period when Section 43-B of the Income Tax Act was in effect. The core of the dispute revolves around the deductibility of unpaid taxation liability. The procedural history involves 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 taxation liability pertained to the last quarter and was paid within the time stipulated for furnishing of return under Section 139(1) of the I.T. Act, the provisions of Section 43-B cannot be invoked? Assessee's Contention: The judgment does not record specific arguments made by the assessee before the High Court. However, the Tribunal's decision, which is being upheld, implies that payment of the last quarter's taxation liability before the due date for filing the return under Section 139(1) would allow for the deduction, thus preventing the invocation of Section 43-B. Revenue's Contention: The judgment does not record specific arguments made by the Revenue before the High Court. However, the fact that the Revenue is the petitioner in the reference indicates their disagreement with the Tribunal's finding, likely arguing that Section 43-B should be invoked regardless of the payment timing relative to the return filing date.

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. 404 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 SONYA CERAMICS ---------------------------------------------------------- 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 taxation liability pertained to the last quarter and if the same was paid within the time stipulated for furnishing of return u/s. 139 (1) of the I.T Act, the provisions of section 43-B 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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Prakash*

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