COMMISSIONER OF INCOME TAX vs. NEO PLAST ENGG. PVT. LTD.

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ITR/282/1994HC GujaratGJHC24020358199413 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 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., which upheld the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43B to mean that the proviso relates back to the commencement of Section 43B (April 1, 1984). Consequently, a 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. Therefore, the question referred to the 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. 282 of 1994 before the High Court of Gujarat at Ahmedabad. The reference was made by the Income Tax Appellate Tribunal, Ahmedabad, concerning the assessment of Neo Plast Engg. Pvt. Ltd. The core issue revolved around the deductibility of unpaid sales tax liability pertaining to the last quarter of a financial year. The Revenue challenged the Tribunal's decision that this liability, if paid within the time stipulated for filing the return under Section 139(1), should be allowed as a deduction under Section 43B. The specific assessment year(s) are not explicitly stated in the provided text, nor is the amount in dispute.

What were the issues?

1. Whether, as a matter of law and fact, the Appellate Tribunal was correct in holding that unpaid sales tax liability pertaining to the last quarter is not subject to the disallowance provisions of Section 43B if it is paid within the time stipulated for filing the return under Section 139(1)? Assessee's Contention: The assessee contended that the unpaid sales tax liability, if paid before the due date for filing the return under Section 139(1), should be allowed as a deduction. This position is supported by the proviso to Section 43B, which allows for deductions if the liability is discharged before the due date of filing the return. Revenue's Contention: The Revenue likely argued that the unpaid sales tax liability, even if paid before the due date of the return, should be disallowed as a deduction in the year it was incurred, as per the main provisions of Section 43B. They would have contested the applicability of the proviso in this specific scenario.

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. 282 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 NEO PLAST ENGG. 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 the unpaid sales tax liability pertaining to the last quarter is paid within the time stipulated for filing of return under section 139 (1) of 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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