COMMISSIONER OF INCOME TAX vs. COMET PHARMACEUTICALS PVT LTD

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ITR/346/1993HC GujaratGJHC24021350199313 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 of Gujarat answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The Court found that the issue was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the High Court's earlier view in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had held that the proviso to Section 43-B related back to the section's commencement date (April 1, 1984). Consequently, a sales tax 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 under Section 139(1) for the relevant previous year in which the liability was incurred. The reference was disposed of accordingly.

What were the facts?

The Commissioner of Income Tax (Revenue) referred a question of law to the High Court of Gujarat at Ahmedabad concerning the assessment of Comet Pharmaceuticals Pvt Ltd (Assessee). The Income Tax Appellate Tribunal (ITAT), Ahmedabad, had made a decision that was being challenged. The core of the dispute revolved around the deductibility of unpaid sales tax liability. The ITAT held that if this liability was paid before the due date for filing the return under Section 139(1) of the Income Tax Act, no addition could be made invoking Section 43B. The High Court was asked to determine if the ITAT's decision was legally and factually correct.

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 outcome implies the assessee argued in favour of the ITAT's decision, relying on the principle that payment before the due date of the return under Section 139(1) makes the deduction allowable. Revenue's Contention: The Revenue, through the Commissioner of Income Tax, challenged the ITAT's ruling, implying they argued that the unpaid sales tax liability should not be allowed as a deduction even if paid before the return filing due date, likely based on a strict interpretation of Section 43B.

Which sections of the Income-tax Act were involved?

Section 256,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. 346 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?

---------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus COMET PHARMACEUTICALS 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 due date of filing of the return u/s. 139 (1) of the Income Tax Act, addition cannot be made invoking the provisions of section 43 B ?" 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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