COMMISSIONER OF INCOME TAX vs. ATLAS LAMINATE INDUSTRIES

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ITR/45/1995HC GujaratGJHC24022370199519 March 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's decision was based on the ratio of its own prior judgment in CIT vs. M/s. Chandulal Venichand and others (209 ITR 7), which was subsequently approved by the Supreme Court in Allied Motors (P) Ltd. vs. CIT (224 ITR 677). The Court reasoned that if the unpaid sales tax liability for the last quarter is paid before the due date for filing the return under Section 139(1) of the Income Tax Act, then no addition could be made by invoking the provisions of Section 43B. The principle established is that the condition of payment within the specified period for filing the return under Section 139(1) overrides the disallowance provision of Section 43B for such liabilities. 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?

The Income Tax Appellate Tribunal (ITAT) referred a question of law to the High Court of Gujarat concerning the deductibility of unpaid sales tax liability. The assessee, Atlas Laminate Industries, had unpaid sales tax for the last quarter of a particular assessment year. The Revenue contended that this liability was not deductible due to Section 43B of the Income Tax Act, 1961. The ITAT held that if the unpaid sales tax liability pertaining to the last quarter was paid within the time stipulated for filing the return under Section 139(1), it was an allowable deduction and Section 43B would not be applicable. The assessment year(s) are not explicitly stated in the provided text. The matter reached the High Court as an Income Tax Reference.

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 under section 139(1), the same was an allowable deduction and the provisions of section 43B will not be applicable in such case? Assessee's contention: The assessee, through the ITAT's decision, argued that the unpaid sales tax liability for the last quarter, if paid before the due date for filing the return under Section 139(1), should be allowed as a deduction. They contended that Section 43B would not disallow this deduction in such circumstances. Revenue's contention: The Revenue contended that the unpaid sales tax liability for the last quarter was not an allowable deduction and that the provisions of Section 43B were applicable, disallowing the deduction. The Revenue's argument is implied by their challenge to the ITAT's order.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 45 of 1995

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 ATLAS LAMINATE INDUSTRIES -------------------------------------------------------------- Appearance: MR B B Naik for MANISH R BHATT for Petitioner SERVED BY RPAD - (N) for the Respondent

--------------------------------------------------------------

CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE KUNDAN SINGH Date of decision: 19/03/98

ORAL JUDGEMENT (Per R.K.Abichandani,J)

The Income-tax Appellate Tribunal has referred the following question for the opinion of this Court under section 256(1) of the Income-tax Act, 1961. "

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 under section 139(1), the same was anallowable deduction and the provisions of section 43B will not be applicable in such case?"

2.

The above question is squarely covered by the decision of this Court in CIT vs. M/s. Chandulal Venichand and others reported in 209 ITR,7 which view was approved by the Supreme Court in Allied Motors (P) Ltd. vs.CIT, reported in 224 ITR, 677. 3. Following the decision of the Supreme Court in Allied Motors (P) Ltd. (Supra), and the ratio of this Court in M/s. Chandulal Venichand (supra), we are of the view that the Tribunal was right in holding that if unpaid sales tax liability is paid before the due date for filing of the return under section 139(1) of the Income tax Act, no addition could be made invoking the provisions of section 43B of the Act. The question referred to us is therefore, answered in the affirmative against the Revenue and in favour of the assessee. The Reference stands disposed of accordingly with no order as to costs.

... ***darji

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