COMMISSIONER OF INCOME TAX vs. TALALA TALUKA SAHAKARI KHAND UDYOG MANDLI LTD.

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ITR/22/1995HC GujaratGJHC24022347199519 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 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 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, no addition could be made by invoking the provisions of Section 43-B. Consequently, the disallowances made under Section 43-B in respect of Rs. 20,22,904/- being unpaid purchase tax liability were deleted. The ratio decidendi is that the condition for disallowance under Section 43-B is met only if the statutory liability is not paid within the prescribed time, which includes the extended period for filing the return.

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 43-B of the Income Tax Act, 1961. The assessee, Talala Taluka Sahakari Khand Udyog Mandli Ltd., had an unpaid sales tax liability pertaining to the last quarter. The Revenue contended that this liability should be disallowed under Section 43-B. The ITAT held that if this liability was paid within the time stipulated for filing the return under Section 139(1), Section 43-B would not apply. The amount in dispute was Rs. 20,22,904/- being unpaid purchase tax liability. The assessment year(s) are not specified.

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 assessee argued, and the Tribunal held, 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), Section 43-B is not applicable. This position was supported by the Tribunal's decision. Revenue's contention: The Revenue contended that the unpaid sales tax liability should be disallowed under Section 43-B. The Revenue's argument is implicit in the question referred and the Tribunal's decision against it.

Which sections of the Income-tax Act were involved?

Section 43-B,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 22 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 TALALA TALUKA SAHAKARI KHAND UDYOG MANDLI 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 and in deleting disallowances made under section 43B in respect of Rs. 20,22,904/- being unpaid purchase tax liability. 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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