COMMISSIONER OF INCOME TAX vs. M P OIL SEEDS INDUSTRIES

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ITR/81/1995HC GujaratGJHC24022406199503 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 reasoning followed the ratio of the Supreme Court's decision in Allied Motors (P) Ltd. v. C.I.T. and the High Court's own prior ruling in C.I.T. v. M/s. Chandulal Venichand & others. The principle established is that if an unpaid statutory liability, such as sales tax, pertains to the last quarter of a financial year and is paid by the due date for filing the income tax return, then the disallowance provisions under Section 43B of the Income Tax Act, 1961, are not applicable. 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 accordingly.

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, referred a question of law to the High Court of Gujarat at Ahmedabad concerning the applicability of Section 43B of the Income Tax Act, 1961. The specific scenario involved unpaid sales tax liability pertaining to the last quarter of a financial year. The assessee, M P Oil Seeds Industries, had paid this liability within the time stipulated for filing the income tax return. The ITAT had ruled that Section 43B could not be invoked in such circumstances. The High Court noted that similar factual backgrounds and identical questions had been addressed in other references 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 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? Assessee's Contention: The judgment does not explicitly record the assessee's arguments. However, the Tribunal's decision, which the High Court upholds, implies that payment within the return filing deadline for a last-quarter liability exempts it from Section 43B disallowance. Revenue's Contention: The judgment does not explicitly record the Revenue's arguments. However, the Revenue is the petitioner in this reference, seeking to challenge the Tribunal's finding, suggesting they argued for the invocation of Section 43B.

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 81 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 M P OIL SEEDS INDUSTRIES -------------------------------------------------------------- Appearance: MR MANISH R BHATT for Petitioner SERVED 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 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/-

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