COMMISSIONER OF INCOME-TAX vs. MADHUSUDAN INDUSTRIES LTD.

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ITR/299/1994HC GujaratGJHC24020375199403 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 its decision. The Court followed the ratio of the Supreme Court's decision in Allied Motors (P) Ltd. v. C.I.T. and its own previous decision in C.I.T. v. M/s. Chandulal Venichand & others. The principle established is that if the sales tax liability for the last quarter remains unpaid but is subsequently paid within the extended due date for filing the income tax return under section 139(1), then the disallowance provisions of section 43B of the Income-tax Act, 1961, cannot be invoked. The reasoning hinges on the interpretation that payment within the section 139(1) deadline satisfies the condition for deductibility, overriding the strict accrual basis for certain statutory liabilities. The question referred is answered in the affirmative, in favour of the assessee and against the Revenue. No issue was expressly left undecided.

What were the facts?

This case involves an Income Tax Reference No. 299 of 1994 before the High Court of Gujarat at Ahmedabad. The Commissioner of Income-tax is the petitioner, and Madhusudan Industries Ltd. is the respondent. The Income-tax Appellate Tribunal, Ahmedabad, has referred a question of law to the High Court for its opinion under section 256(1) of the Income-tax Act, 1961. The judgment notes that identical factual background and questions of law have been considered in Income-tax Reference No. 295/94, decided concurrently. The specific facts leading to the Tribunal's order are not reproduced in this judgment, but they pertain to the applicability of section 43B concerning unpaid sales tax liability.

What were the issues?

1. Whether, as a matter of law and fact, the Appellate Tribunal is correct in holding that the provisions of section 43B of the Income-tax Act, 1961, are not applicable if the unpaid sales tax liability pertaining to the last quarter of the financial year is paid within the time stipulated for filing the return under section 139(1). Assessee's Contention: The judgment does not explicitly record the assessee's arguments. However, by referring to the Tribunal's finding and answering the question in favour of the assessee, it implies the assessee's position aligns with the Tribunal's conclusion. Revenue's Contention: The judgment does not explicitly record the Revenue's arguments. However, the reference of the question to the High Court by the Tribunal indicates the Revenue likely disagreed with the Tribunal's ruling and sought a higher judicial opinion.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 299 of 1994

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 MADHUSUDAN INDUSTRIES LTD. -------------------------------------------------------------- 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 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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