COMMISSIONER OF INCOME TAX LDH vs. HIGHWAY CYCLE INDS LTD

ITR/354/1995HC Punjab & HaryanaPHHC01032430199505 December 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
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What were the facts?

This case involves Income Tax Reference (ITR) Nos. 354 of 1995, decided by the High Court of Punjab and Haryana at Chandigarh on December 5, 2006. The applicant is the Commissioner of Income Tax (Central), Ludhiana, and the respondent is Highway Cycle Industries Ltd., Ludhiana. The reference arises from an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, dated October 26, 1993, concerning assessment year 1984-85. The High Court was asked to opine on two questions of law referred by the ITAT.

What did the High Court hold?

The High Court held that the first proviso to section 43B, inserted by the Finance Act, 1987, effective from April 1, 1988, has retrospective application. Consequently, if outstanding sales tax or central sales tax has been paid before the due date specified in the first proviso to section 43B, the amount cannot be disallowed under section 43B, even if the evidence of payment was not furnished along with the return of income. The Court's decision was based on the concession made by the revenue, acknowledging that the issue was covered against them by the Hon'ble Supreme Court's judgment in Allied Motors (P) Limited v. Commissioner of Income Tax (1997) 224 ITR 677. The High Court followed its own prior decision in ITR No.94 of 1996, Commissioner of Income tax (C), Ludhiana v. M/s Avery Cycle Inds. Pvt. Limited, Ludhiana, which also applied the Supreme Court's ruling. Therefore, both questions were answered against the revenue and in favour of the assessee.

What were the issues?

The High Court was asked to decide the following questions of law: 1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that the first proviso to section 43B inserted by the Finance Act, 1987, w.e.f. 1.4.1988 has retrospective application? 2. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that if the outstanding on account of Sales-tax, Central Sales-tax has been paid before the due date as defined in the first proviso to section 43B, the amount cannot be disallowed u/s 43B even when the ‘evidence’ for payment before the due date for filing of return u/s 139(1) was not furnished along with the return of income? The revenue conceded that the issue was covered against it by the Supreme Court judgment in Allied Motors (P) Limited v. Commissioner of Income Tax (1997) 224 ITR 677. The assessee relied on this judgment.

Which sections of the Income-tax Act were involved?

Section 43B,Section 139(1)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. Nos.354 of 1995 Date of decision: 05.12.2006 Commissioner of Income Tax (Central), Ludhiana. ---Applicant Vs. Highway Cycle Industries Ltd., Ludhiana. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE RAJESH BINDAL Present: Mr. S.K. Garg Narwana, Advocate for the revenue. Mr. Akshay Bhan, Advocate for the assessee. -----

ORDER: Following questions of law have been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dated 26.10.1993 in I.T.A. No.207.Chandi/89 in respect of assessment year 1984-85:- “1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that the first proviso to section 43B inserted by the Finance Act, 1987, w.e.f. 1.4.1988 has retrospective application?

2.

Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that if the outstanding on account of Sales-tax, Central Sales-tax has been paid before the due date as defined in the first proviso to section 43B, the amount cannot be disallowed u/s 43B even when th

The order continues below.

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