COMMISSIONER OF INCOME TAX vs. SUPER STAR CABLE INDUSTRIES

PDF · subscribers
ITR/120/1995HC GujaratGJHC24022445199503 February 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 reasoned that if the unpaid sales tax liability related to the last quarter of the financial year and was subsequently paid within the time allowed for filing the income tax return, then the provisions of Section 43B of the Income Tax Act, 1961, cannot be invoked to disallow the deduction. This conclusion is based on the ratio of the Supreme Court's decision in Allied Motors (P) Ltd. v. C.I.T. and the High Court's own prior decision in C.I.T. v. M/s. Chandulal Venichand & others. The principle is that for liabilities falling in the last quarter, payment before the due date of the return satisfies the condition, thereby allowing the deduction. The question referred is answered in the affirmative, in favour of the assessee and against the revenue.

What were the facts?

The Income Tax Appellate Tribunal (ITAT) Ahmedabad referred a question of law to the High Court of Gujarat concerning the applicability of Section 43B of the Income Tax Act, 1961. The specific scenario involved an unpaid sales tax liability pertaining to the last quarter of a financial year. The core factual premise, though not explicitly detailed in this judgment, is that this unpaid sales tax was paid within the stipulated time for filing the income tax return. The judgment refers to an identical factual background in another case, Income-tax Reference No. 295/94, decided concurrently. The assessee is Super Star Cable Industries, and the revenue is represented by the Commissioner of Income Tax.

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 pertained to the last quarter and if the same was paid within the time stipulated for filing of the return, the provisions of section 43B cannot be invoked? (Question of law and fact, concerning Section 43B of the Income Tax Act, 1961). Assessee's Contention: The judgment does not explicitly record the assessee's arguments but implies their position by upholding the Tribunal's decision. The assessee would have argued that payment within the return filing deadline for the last quarter's liability exempts them from the disallowance under Section 43B. Revenue's Contention: The judgment does not explicitly record the revenue's arguments but implies their position by answering the question against them. The revenue would have argued for the invocation of Section 43B, disallowing the deduction of the unpaid sales tax liability.

Which sections of the Income-tax Act were involved?

Section 43B,Section 256(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 120 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 SUPER STAR CABLE INDUSTRIES -------------------------------------------------------------- Appearance: MR MANISH R BHATT for Petitioner SERVED BY RPAD for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE KUNDAN SINGH Date of decision: 03/02/98

ORAL JUDGEMENT Per: R.K. Abichandani, J.

1.

The Income-tax Appellate Tribunal, Ahmedabad has referred the following question for the opinion of this Court under section 256(1) of the Income-tax Act, 1961. "Whether, the Appellate Tribunal is right in law and on facts in holding that if the unpaid sales tax liability pertained to the last quarter and if the same was paid within the time stipulated

for filing of the return, the provisions of section 43B cannot be invoked ?"

2.

Identical question in similar factual background came up for consideration before us in Income-tax Reference No. 295/94 which is decided by us today. Since the facts are similar and point involved is identical, we do not reproduce the facts in this order from the record of this Reference. In answering the identical question in the said matter we have followed the ratio of the decision of the Supreme Court in Allied Motors (P) Ltd. v. C.I.T. reported in 224 ITR P. 677 and the decision of this Court in the case of C.I.T. v. M/s. Chandulal Venichand & others, reported in 209 ITR P.

7.

For the reasons which are given by us in deciding the question involved in Income-tax Reference No. 295/94, we are of the view that the Tribunal was right in holding that if the unpaid sales tax liability pertained to the last quarter and if the same was paid within the time stipulated for filing of the return, the provisions of section 43B cannot be invoked. The question referred to us is, therefore, answered in the affirmative against the Revenue and in favour of the assessee. The Reference stands disposed off accordingly with no order as to costs.

[R.K. ABICHANDANI, J.]

[KUNDAN SINGH, J.] ***** Amp/-

More judgments on Section 43B

All 7,161 judgments and leading authorities on Section 43B →

Recent GST High Court judgments

Search GST case law →