C.I.T .LDH. vs. M/S AVON CYCLES LTD.

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ITR/245/1995HC Punjab & HaryanaPHHC01032308199508 November 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the issue is 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 Court decided the issue against the revenue and in favour of the assessee. The question of law is answered accordingly. The operative direction is to answer the reference in favour of the assessee.

What were the facts?

This case involves an Income Tax Reference (ITR) filed by the Commissioner of Income Tax (C), Ludhiana, against an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The assessment year in question is 1986-87. The dispute pertains to a disallowance made by the Assessing Officer under Section 43B of the Income-tax Act, which was subsequently deleted by the first appellate authority. The ITAT upheld the deletion. The revenue has challenged the ITAT's decision before the High Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in upholding the order of the first appellate authority deleting the disallowance made u/s 43B of the Income-tax Act by holding that the two provisos to section 43B, inserted by the Finance Act, 1987 w.e.f. 1.4.1988 and the Finance Act, 1988 w.e.f. 1.4.1988, have retrospective application? Assessee's Contention: The assessee argued that the ITAT was correct in deleting the disallowance, implying that the provisos to Section 43B should be applied retrospectively. Revenue's Contention: The revenue contended that the ITAT erred in law by upholding the deletion of the disallowance, suggesting that the provisos to Section 43B do not have retrospective application.

Which sections of the Income-tax Act were involved?

Section 43B

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. No.245 of 1995 Date of decision: 08.11.2006 The Commissioner of Income Tax (C), Ludhiana. ---Applicant Vs. M/s Avon Cycles (P) 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 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 27.06.1994 in I.T.A. No.932/Chandi/1989 in respect of assessment year 1986-87:- “Whether, on the facts and in the circumstances of the case, the ITAT was right in law in upholding the order of the first appellate authority deleting the disallowance made u/s 43B of the Income-tax Act by holding the two provisos to section 43B inserted by the Finance Act, 1987 w.e.f. 1.4.1988 and the Finance Act, 1988 w.e.f. 1.4.1988 have retrospective application?” We find that the issue is covered against the revenue and in favour of the assessee by the judgment of Hon’ble 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, we have decided the issue against the revenue and in favour of the assessee vide our order 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. No.245 of 1995

Accordingly, the question is answered against the revenue and in favour of the assessee. ( ADARSH KUMAR GOEL ) JUDGE November 08, 2006 ( RAJESH BINDAL ) ashwani JUDGE Pag e

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