COMMISSIONER OF INCOME TAX vs. METRO ENTERPRISES

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ITR/49/1995HC GujaratGJHC24022374199519 March 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 Tribunal was right in its conclusion. The Court's decision was based on the established legal precedents, specifically the decision of the same High Court 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). Following these authoritative pronouncements, the High Court affirmed that if the unpaid sales tax liability is paid before the due date for filing the return under Section 139(1) of the Income-tax Act, no addition could be made by invoking the provisions of Section 43-B. The question referred was answered in the affirmative, favoring the assessee and against the Revenue. The reference was disposed of accordingly, with no order as to costs.

What were the facts?

This case involves an Income Tax Reference No. 49 of 1995 before the High Court of Gujarat at Ahmedabad. The Commissioner of Income Tax (Revenue) is the petitioner, and Metro Enterprises (Assessee) is the respondent. The Income-tax Appellate Tribunal (Tribunal) referred a question of law to the High Court under Section 256(1) of the Income-tax Act, 1961. The core of the dispute concerns the applicability of Section 43-B of the Act to unpaid sales tax liability pertaining to the last quarter of a financial year, if such liability is paid within the time stipulated for filing the return under Section 139(1). The procedural history involves the Tribunal making a reference to the High Court.

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 provisions of section 43-B cannot be made applicable? The Revenue's contention, implied by the reference of the question, is that Section 43-B should be applied, disallowing the deduction for unpaid sales tax if not paid within the previous year. The Assessee's contention, as reflected in the Tribunal's holding, is that payment of the sales tax liability within the due date for filing the return under Section 139(1) is sufficient to allow the deduction, thereby overriding the disallowance under Section 43-B. The Tribunal's decision hinges on the interpretation of Section 43-B in conjunction with Section 139(1).

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 49 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 METRO ENTERPRISES -------------------------------------------------------------- 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 provisions of section 43-B cannot be made applicable ?"

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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