COMMISSIONER OF INCOME TAX vs. SHAH CHIMANLAL PREMCHAND

PDF · subscribers
ITR/183/1995HC GujaratGJHC24022506199503 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 Court's reasoning was based on the ratio of the Supreme Court decision in Allied Motors (P) Ltd. v. C.I.T. (224 ITR p. 677) and its own prior decision in C.I.T. v. M/s. Chandulal Venichand & others (209 ITR p. 7). The principle established is that if an unpaid statutory liability, such as sales tax, is paid before the due date for filing the income tax return, then the disallowance provisions of section 43B of the Income-tax Act, 1961, cannot be invoked. 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?

This case involves an Income Tax Reference No. 183 of 1995 before the High Court of Gujarat at Ahmedabad. The Income-tax Appellate Tribunal, Ahmedabad, referred a question of law to the High Court for its opinion under section 256(1) of the Income-tax Act, 1961. The facts are stated to be similar to those in Income-tax Reference No. 295/94, which was decided concurrently. The core issue revolves around the disallowance of unpaid sales tax liability under section 43B of the Income-tax Act, 1961, when such liability is paid before the due date for filing the return. The assessee is Shah Chimanlal Premchand, and the petitioner is the Commissioner of Income Tax.

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 is paid before the due date for filing of the return, disallowance cannot be made invoking the provisions of section 43B? Assessee's Contention: The judgment does not explicitly record the assessee's contentions. However, by implication, the assessee would argue that payment of the sales tax liability before the due date for filing the return negates the disallowance under section 43B. Revenue's Contention: The judgment does not explicitly record the revenue's contentions. However, by implication, the revenue would argue for the disallowance of the unpaid sales tax liability under section 43B, irrespective of the payment date relative to the return filing due date.

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 183 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 CHIMANLAL PREMCHAND -------------------------------------------------------------- Appearance: MR MANISH R BHATT for Petitioner NOTICE NOT RECD BACK 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 is paid before the due date for filing of the return, disallowance cannot be made invoking the provisions of section 43B ?"

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 is paid before the due date for filing of return, disallowance cannot be made invoking the provisions of section 43B. 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/-

More judgments on Section 43B

All 7,161 judgments and leading authorities on Section 43B →

Recent GST High Court judgments

Search GST case law →