CI.T vs. M/S BS KOHLI
What did the High Court hold?
The High Court held that the question of law referred to it was covered against the revenue and in favour of the assessee by the judgment of the Hon'ble Supreme Court in Allied Motors (P) Limited v. Commissioner of Income Tax (1997) 224 ITR 677. Following this precedent, the High Court also referred to its own prior decision in ITR No.94 of 1996, The Commissioner of Income tax (C), Ludhiana v. M/s Avery Cycle Inds. Pvt. Limited, Ludhiana, which had decided the issue against the revenue and in favour of the assessee. Therefore, the Court answered the question in favour of the assessee, upholding the ITAT's deletion of the disallowance. The reasoning is based on the established legal principle that sales tax liability, if paid before the due date for filing the return of income, is allowable as a deduction, and that the First Proviso to Section 43B, concerning such payments, has retrospective application. The operative direction is that the question of law is answered against the revenue.
What were the facts?
This case concerns Income Tax Reference No. 132 of 1996, decided by the High Court of Punjab and Haryana at Chandigarh on November 9, 2006. The reference arises from an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, dated September 13, 1994, pertaining to assessment year 1984-85. The dispute involves the disallowance of sales tax liability of Rs. 46,637 made by the Assessing Officer. The ITAT had deleted this disallowance. The Commissioner of Income Tax (Central), Ludhiana, is the applicant (revenue), and M/s B.S. Kohli Synthetics (P) Ltd., Ludhiana, is the respondent (assessee).
What were the issues?
The Tribunal referred the following question of law to the High Court for its opinion: 1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in deleting the disallowance under Section 43B made by the Assessing Officer by holding that the sales tax liability of Rs. 46,637/- is allowable if the payment is made before the due date prescribed under Section 139(1) and that the First Proviso to Section 43B has retrospective application though it came into being w.e.f. 1.4.1988? Contentions: Assessee: The judgment does not record specific contentions made by the assessee. However, the ITAT's deletion of the disallowance implies the assessee argued for the allowability of the sales tax liability based on payment before the due date and the retrospective application of the First Proviso to Section 43B. Revenue: The revenue conceded that the issue was covered against them and in favour of the assessee by the Supreme Court judgment in Allied Motors (P) Limited v. Commissioner of Income Tax (1997) 224 ITR 677.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORDER: 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 13.09.1994 in I.T.A. Nos.1389/Chandi/89 in respect of assessment year 1984-85:- “Whether on the facts and in the circumstances of the case, the ITAT was right in law in deleting the disallowance u/s 43B made by the Assessing Officer by holding that the sales tax liability of Rs. 46,637/- is allowable if the payment is made before the due date prescribed under section 139(1) and that Ist proviso to Section 43B has retrospective application though it came into being w.e.f. 1.4.1988?” It is fairly conceded by the learned counsel for the revenue that the issue is covered against the revenue and in favour of the assessee by the judgment of Hon’ble the Supreme Court in Allied Motors (P) Limited v. Commissioner of Income Tax
( 1997) 224 ITR 677. Following the above judgment of the Hon’ble Supreme Court, the issue has been decided against the revenue and in favour of the assessee vide order of this Court dated 5.9.2006 in ITR No.94 of 1996, The Commissioner of Income tax (C), Ludhiana v. M/s Avery Cycle Inds. Pvt. Limited, Ludhiana..
I.T.R. Nos.132 of 1996
Accordingly, the question is answered against the revenue and in favour of the assessee. ( AJAY KUMAR MITTAL ) JUDGE November 09, 2006 ( RAJESH BINDAL ) ashwani JUDGE Pag e
More judgments on Section 43B
- Vco Consulatatns and Sevices Private… vs ITO, Corporate Ward 3(3), ChennaiITA 2145/CHNY/2025[2019-20]Status: Disposed16 Oct 2026AY 2019-20
- Siemens Gamesa Renewable Power Private… vs The Dy CIT Circle 8(2)(1), MumbaiITA 8020/MUM/2025[2017-18]Status: Disposed9 Oct 2026AY 2017-18
- Amritvarsha Industries Limited, Ambedkar… vs Assistant Commissioner of Income Tax…ITA 6481/DEL/2026[2010-2011]Status: Disposed7 Oct 2026AY 2010-2011
- Karaj Singh, Haryana vs PCIT (Central) Gurgaon, GurgaonITA 642/CHANDI/2026[2022-23]Status: Disposed1 Oct 2026AY 2022-23
- ACIT, Mumbai vs Imp Powers Limited, MumbaiITA 4982/MUM/2025[2012-13]Status: Disposed30 Sept 2026AY 2012-13
Recent GST High Court judgments
Search GST case law →- Kniit Net Industries Private Limited, Khurda vs. Superintendent Of CGST And Central Excise, Bhubaneswar Ii CircleOrissa · 14 Oct 2026
- M/S Maa Swarnapai Chemicals (Opc) Private Limited, Cuttack vs. Sales Tax Officer, Cuttack IOrissa · 14 Oct 2026
- M/S. Middlex, Puri vs. Commnr. Of State Tax, Banijyakar Bhawan, CuttackOrissa · 14 Oct 2026
- M/S Maa Sunadei Indane Gramin Vitrak, Nayagarh vs. Commissioner Of CT And GST, Cuttack, OdishaOrissa · 14 Oct 2026
- Sunanda Raul vs. The Commissioner Of Commercial Taxes And Goods Nad Services Tax, OdishaOrissa · 14 Oct 2026
