COMMISSIONER OF INCOME-TAX vs. SHAH ANISHKUMAR BABUBHAI

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ITR/94/1995HC GujaratGJHC24022419199503 February 1998Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE KUNDAN SINGH2 pages
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What did the High Court hold?

The High Court held that the Tribunal was correct in its determination. The Court found that the proviso inserted into Section 43B of the Income-tax Act, 1961, effective from April 1, 1988, by the Finance Act, 1987, was indeed retrospective in operation. Consequently, it applied to the assessment years 1984-85 to 1987-88. 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 decision in C.I.T. v. M/s. Chandulal Venichand & others. The Tribunal's direction to the ITO to allow the deduction, subject to verification that the unpaid sales tax liability was discharged by actual payment before the due date for filing the return under Section 139(1), was upheld. 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 concerning the assessment years 1984-85 to 1987-88. The dispute revolved around the deductibility of unpaid sales tax liability. The ITAT had held that a proviso inserted into Section 43B of the Income-tax Act, 1961, effective from April 1, 1988, was retrospective and applicable to the disputed assessment years. The ITAT directed the Income Tax Officer (ITO) to allow the deduction upon verification that the unpaid sales tax liability was discharged by actual payment before the due date for filing the return under Section 139(1). The Commissioner of Income-tax (Revenue) challenged this order.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the proviso inserted w.e.f. 1.4.88 in section 43B of the Act by the Finance Act, 1987 was retrospective in operation and applied to assessment years 1984-85 to 1987-88 also? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in directing the ITO to allow the deduction on verifying the fact that unpaid sales tax liability had been discharged by actual payment before the due date for filing the return under section 139(1)? Assessee's contentions: The assessee contended that the proviso to Section 43B, inserted by the Finance Act, 1987, with effect from April 1, 1988, should be treated as retrospective. The assessee relied on the Supreme Court decision in Allied Motors (P) Ltd. v. C.I.T. and the Gujarat High Court decision in C.I.T. v. M/s. Chandulal Venichand & others. Revenue's contentions: The judgment does not record any specific contentions made by the Revenue. However, the reference itself indicates the Revenue's disagreement with the ITAT's order.

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 94 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 SHAH ANISHKUMAR BABUBHAI -------------------------------------------------------------- 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 Tribunal was right in holding that the proviso inserted w.e.f. 1.4.88 in section 43B of the Act by the Finance Act, 1987 was retrospective in operation and applied to as assessment year 1984-85 to 1987-88 also and in directing the ITO to allow the deduction on verifying the fact that unpaid sales tax liability had been discharged by actual payment before due date for filing the return under section 139 (1)?"

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 the proviso inserted w.e.f. 1.4.88 in section 43B of the Act by the Finance Act, 1987 was retrospective in operation and applied to as assessment year 1984-85 to 1987-88 also and in directing the ITO to allow the deduction on verifying the fact that unpaid sales tax liability had been discharged by actual payment before due date for filing the return under section 139 (1). 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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