COMMISSIONER OF INCOME TAX vs. ASHOKKUMAR KALYANBHAI

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ITR/316/1992HC GujaratGJHC24015656199213 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 found that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T., reported in 224 ITR 677. This Supreme Court judgment approved the High Court's own view in C.I.T vs. Chandulal Venechand, reported in 209 ITR 7. In Chandulal Venechand's case, the High Court had interpreted the proviso to Section 43B to mean that it related back to the date of operation of Section 43B (April 1, 1984). Consequently, a sales tax liability incurred in the last quarter would be allowable as a deduction if actually paid before the due date for furnishing the return of income under Section 139(1) for the relevant previous year. The ratio decidendi is that the proviso to Section 43B provides for deductibility of statutory liabilities paid before the due date of filing the return, irrespective of the previous year in which the liability was incurred.

What were the facts?

This case involves an Income Tax Reference No. 316 of 1992 before the High Court of Gujarat at Ahmedabad. The Commissioner of Income Tax (Revenue) is the petitioner, and Ashokkumar Kalyanbhai (Assessee) is the respondent. The matter was referred to the High Court by the Income Tax Appellate Tribunal, Ahmedabad, under Section 256(1) of the Income Tax Act. The core issue revolves around the deductibility of unpaid sales tax liability for the last quarter of a financial year, which was paid within the stipulated time for filing the income tax return. The specific assessment year(s) are not explicitly stated but are implied to be related to the period when Section 43B and its proviso were in effect.

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 pertained to the last quarter and if the same was paid within the time stipulated for filing of the return, the provisions of Section 43B cannot be invoked? Assessee's Contention: The assessee's position, as reflected in the Tribunal's decision, is that the unpaid sales tax liability for the last quarter, if paid before the due date of filing the return under Section 139(1), should be allowed as a deduction. The assessee implicitly argues that the proviso to Section 43B overrides the main section in such circumstances. Revenue's Contention: The Revenue, by challenging the Tribunal's order, contends that Section 43B should be invoked, disallowing the deduction of the unpaid sales tax liability even if paid before the return filing due date, unless specific conditions are met. The Revenue likely argues for a strict interpretation of Section 43B.

Which sections of the Income-tax Act were involved?

Section 43B,Section 256(1),Section 139(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No. 316 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 ASHOKKUMAR KALYANBHAI ---------------------------------------------------------- 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 pertained to thelast quarter and if the same was paid within the time stipulated for filing of the return the provisions of Section 43B 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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