COMMISSIONER OF INCOME TAX vs. MALL ICE CREAMS GUJ P LTD

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ITR/332/1993HC GujaratGJHC24021338199313 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 question referred to it is concluded by the decision of the Hon'ble Supreme Court in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had construed Section 43B and its proviso. It was held that the proviso related back to the commencement of Section 43B (April 1, 1984). Consequently, such 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 of income under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the revenue.

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, referred a question of law to the High Court of Gujarat. The assessee is Mall Ice Creams Guj P Ltd, and the revenue is the Commissioner of Income Tax. The dispute concerns the applicability of Section 43B of the Income Tax Act, 1961, to unpaid sales tax liability pertaining to the last quarter of a financial year. The core issue is whether this liability can be allowed as a deduction if paid within the time stipulated for filing the return of income under Section 139(1). The procedural history involves the ITAT referring this question 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 sales tax liability pertaining to the last quarter is paid within the time stipulated for filing of return u/s. 139 (1), the provisions of section 43B cannot be made applicable? Assessee's Contention: The judgment does not explicitly record the assessee's arguments, but the outcome implies the assessee contended that payment of the sales tax liability within the Section 139(1) due date would allow the deduction, thereby making Section 43B inapplicable in a manner that disallows the deduction. Revenue's Contention: The judgment does not explicitly record the revenue's arguments, but the reference of the question to the High Court suggests the revenue contended that Section 43B should be applied to disallow the deduction even if paid before the return filing due date.

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. 332 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 MALL ICE CREAMS GUJ P 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 pertaining to the last quarter is paid within the time stipulated for filing of return u/s. 139 (1) 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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