COMMISSIONER OF INCOME TAX vs. NAVIN TRDERS

PDF · subscribers
ITR/1/1995HC GujaratGJHC24022326199519 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 Income Tax Appellate Tribunal was correct in its decision. The Court relied on 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). Following these precedents, the High Court ruled 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, then no addition can be made by invoking the provisions of Section 43B. The ratio decidendi is that for the purpose of Section 43B, payment of statutory liabilities like sales tax within the extended period allowed for filing the return under Section 139(1) is considered timely payment, thereby disallowing the deduction in the year it became payable. The question referred was answered in the affirmative, in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

What were the facts?

This case involves an Income Tax Reference filed by the Commissioner of Income Tax (Revenue) against Navin Traders (Assessee) before the High Court of Gujarat. The Income Tax Appellate Tribunal (ITAT) had referred a specific question of law for the High Court's opinion under Section 256(1) of the Income-tax Act, 1961. The core of the dispute concerns the applicability of Section 43-B of the Income-tax Act concerning unpaid sales tax liability. The procedural history indicates that the ITAT made a finding, which the Revenue is challenging through this 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 provisions of section 43-B cannot be made applicable? Assessee's Contention: The judgment does not explicitly record the assessee's arguments. However, the Tribunal's decision, which is being upheld, implies that payment of unpaid sales tax liability before the due date for filing the return under Section 139(1) negates the applicability of Section 43-B. Revenue's Contention: The Revenue, by filing the reference, is challenging the Tribunal's finding. Their implicit contention is that Section 43-B should be applied irrespective of the payment date relative to the return filing date, or that the Tribunal erred in its interpretation of the provision.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 1 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 NAVIN TRDERS -------------------------------------------------------------- Appearance: MR B BNaik 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

More judgments on Section 256(1)

All 755 judgments and leading authorities on Section 256(1) →

Recent GST High Court judgments

Search GST case law →