C.I.T vs. M/S BHASIN AND CO.

ITR/324/1995HC Punjab & HaryanaPHHC01032396199530 November 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
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What were the facts?

The assessee, M/s Bhasin & Co., Ludhiana, is the respondent, and the Commissioner of Income-tax, Patiala, is the petitioner. The assessment year in question is 1983-84. The Assessing Officer disallowed a deduction claimed for sales tax and central sales tax payable, relying on the decision in Sirsa Industries v. Commissioner of Income-tax. An application for rectification under Section 154 was dismissed. The CIT(A) allowed the assessee's claim, following a judgment in Commissioner of Income-tax, Amritsar-I v. United India Woollen Mills. The Income Tax Appellate Tribunal (ITAT) remanded the matter back to the Assessing Officer, referring to its Ahmedabad Bench's decision in ITO Vs. K.S.Lokhandwala. The revenue has filed a reference to the High Court against the ITAT's order.

What did the High Court hold?

The High Court held that the ITAT was not right in directing reconsideration in light of the K.S.Lokhandwala judgment for the assessment year 1983-84, as that judgment related to assessment year 1984-85, after the amendment of Section 43B. However, the Court found that the view expressed in K.S.Lokhandwala was later endorsed by the Supreme Court in Allied Motors (P) Ltd. v. Commissioner of Income-tax (1997) 224 ITR 677. The Supreme Court held that the amendment to Section 43B was retrospective and clarificatory, meaning a claim for sales tax payment could not be disallowed solely because it was met after the accounting year. Furthermore, the Court noted that the Single Bench decision in Sirsa Industries, relied upon by the Assessing Officer, was reversed in 178 ITR 437. The earlier judgment in United India Woollen Mills, followed by the CIT(A), was also upheld. Therefore, the question of law was decided against the revenue and in favour of the assessee. The operative direction was to decide the issue in favour of the assessee.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in directing that the issue needed reconsideration in the light of the judgment of the Ahmedabad Bench of the Tribunal in the case of ITO Vs. K.S.Lokhandwala (31 ITD 305)? (Question of law) Assessee's contentions: Not recorded. Revenue's contentions: The revenue's primary contention, implied by the reference, is that the ITAT erred in remanding the matter based on the K.S.Lokhandwala decision, as that case pertained to assessment year 1984-85, after an amendment to Section 43B, whereas the present case is for assessment year 1983-84. The revenue likely argued that the disallowance was correct based on the law applicable to assessment year 1983-84.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 154,Section 43B

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

**** I.T.R. No.324 of 1995 Date of Decision:30.11.2006 The Commissioner of Income-tax, Patiala .....Petitioner Vs. M/s Bhasin & Co., 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. **** ADARSH KUMAR GOEL, J. Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh arising out of its order dated 9.1.1992 in I.T.A. No.784/Chandi/1987 in respect of assessment year 1983-84:- “Whether, on the facts and in the circumstances of the case, the (31 ITD 305)?” The facts as noticed in the statement of case are as under:- The assessment in the case of the assessee Shri Bhasin was completed under Section 143(3) of the Income-tax Act, 1961 (for short, `the Act') and deduction claimed on acc

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