COMMISSIONER OF INCOME TAX vs. GORDHANBHAI JETHABHAI PATEL

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ITR/208/1995HC GujaratGJHC24022531199503 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 Appellate Tribunal was correct in allowing the sales tax paid after the close of the previous year but before the due date of filing the return under Section 139(1) as a deduction for Assessment Year 1985-86. The Court followed the ratio of the Supreme Court decision in Allied Motors (P) Ltd. v. C.I.T. and its own decision in C.I.T. v. M/s. Chandulal Venichand & others. The reasoning is that the proviso to Section 43B, which restricted such deductions, was inserted with effect from April 1, 1988, and therefore, it did not apply to the assessment year in question. The principle is that deductions are allowable based on the law applicable during the relevant previous year. 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. The case involves the Commissioner of Income Tax (Revenue) and Gordhanbhai Jethabhai Patel (Assessee). The assessment year in question is 1985-86. The dispute concerns the allowability of sales tax paid after the close of the previous year but before the due date for filing the return under Section 139(1) of the Income-tax Act, 1961. This occurred at a time when the proviso to Section 43B had not yet been inserted, which was effective from April 1, 1988. The High Court noted that identical facts and issues had been considered in another reference decided concurrently.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the sales tax paid after the close of the previous year but before the due date of filing of the return under Section 139(1) was allowable as a deduction in Assessment Year 1985-86, when the proviso to Section 43B was inserted with effect from April 1, 1988? Assessee's contentions: The judgment does not record specific contentions made by the assessee. However, the fact that the ITAT ruled in favour of the assessee implies that the assessee argued for the allowability of the sales tax deduction. Revenue's contentions: The judgment does not record specific contentions made by the revenue. However, the reference of the question to the High Court by the ITAT indicates that the revenue likely disputed the ITAT's decision allowing the deduction.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 208 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 GORDHANBHAI JETHABHAI PATEL -------------------------------------------------------------- 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 on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the sales tax paid after the close of previous year but before the due date of filing of return u/s. 139(1) was allowable as a deduction in A.Y. 1985-86 when proviso to sec. 43B was inserted with effect from 1st April, 1988? "

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 Tribunal was right in holding that the sales tax paid after the close of previous year but before the due date of filing of return u/s. 139(1) was allowable as a deduction in A.Y. 1985-86 when proviso to sec. 43B was inserted with effect from 1st April, 1988. 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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