COMMISSIONER OF INCOME TAX vs. BOMBAY GARRAGE (ABD)LTD.

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ITR/8/1995HC GujaratGJHC24022333199519 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 ITAT was correct in its decision. The court followed its own prior decision 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 ratio decidendi is that if an unpaid statutory liability, such as sales tax, is paid before the due date for filing the income tax return under Section 139(1), the disallowance provisions of Section 43B of the Income-tax Act, 1961, are not attracted. Consequently, no addition could be made to the assessee's income on this account. 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 with no order as to costs.

What were the facts?

The Income Tax Appellate Tribunal (ITAT) referred a question of law to the High Court of Gujarat concerning the applicability of Section 43B of the Income-tax Act, 1961. The dispute involved whether unpaid sales tax liability pertaining to the last quarter of a financial year, if paid within the time stipulated for filing the return under Section 139(1), would attract the provisions of Section 43B. The assessee is Bombay Garage (ABD) Ltd., and the revenue is the Commissioner of Income Tax. The assessment year(s) are not explicitly stated, but the reference is from ITAT. The procedural history involves a reference made by the ITAT under Section 256(1) of the Income-tax Act, 1961, for the High Court's 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 under section 139(1), the provisions of section 43-B cannot be made applicable? Assessee's Contention: The judgment does not record any specific contentions made by the assessee. However, the Tribunal's decision, which is being upheld, implies that payment before the due date of the return under Section 139(1) negates the applicability of Section 43B. Revenue's Contention: The judgment does not record any specific contentions made by the revenue. However, the reference to Section 43B suggests the revenue likely argued for its applicability to disallow the deduction of the unpaid sales tax liability.

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 8 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 BOMBAY GARRAGE (ABD)LTD. -------------------------------------------------------------- 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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