COMMISSIONER OF INCOME TAX vs. ORIENT SUPPLY AGENCY

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ITR/68/1995HC GujaratGJHC24022393199503 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 finding. Following the ratio of the Supreme Court decision in Allied Motors (P) Ltd. v. C.I.T. and its own prior decision in C.I.T. v. M/s. Chandulal Venichand & others, the Court reasoned that if the unpaid sales tax liability for the last quarter is paid within the time stipulated for filing the return under Section 139(1), the provisions of Section 43B are not applicable. The principle established is that for statutory liabilities like sales tax, payment within the extended period for filing the return satisfies the condition for deductibility, thereby avoiding the rigors of Section 43B. The question referred to the Court was 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 issue revolved around 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 disallowance provisions of Section 43B. The High Court noted that identical factual backgrounds and questions had been considered in a related reference, Income Tax Reference No. 295/94, decided concurrently.

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 43B cannot be made applicable? Assessee's Contention: The assessee contended, implicitly through the Tribunal's finding, that payment of sales tax liability for the last quarter within the extended period allowed for filing the return under Section 139(1) should not lead to disallowance under Section 43B. Revenue's Contention: The revenue, by challenging the Tribunal's order, implicitly argued that Section 43B should be applied, disallowing the deduction of the unpaid sales tax liability even if paid within the Section 139(1) timeline.

Which sections of the Income-tax Act were involved?

Section 43B,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 68 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 ORIENT SUPPLY AGENCY -------------------------------------------------------------- Appearance: MR MANISH R BHATT for Petitioner -------------------------------------------------------------- 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 pertaining to the last quarter is paid within the time stipulated for filing of return under section 139(1), the provisions of section 43B cannot be made applicable ?"

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 pertaining to the last quarter is paid within the time stipulated for filing of return under section 139(1), the provisions of section 43B cannot be made applicable. 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/-

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