C.I.T. PAIALA vs. M/S INDUSTRIAL CABLES(INDIA) LTDE.

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ITR/356/1995HC Punjab & HaryanaPHHC01032432199508 November 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL1 pages
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What did the High Court hold?

The High Court held that the issue 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 Court decided the issue against the revenue and in favour of the assessee. The question referred was answered in favour of the assessee. The operative direction was to answer the question in favour of the assessee, implying that the deduction of Rs. 5,70,481/- was to be allowed. No issue was expressly left undecided.

What were the facts?

This case concerns an Income Tax Reference (ITR) filed by the Commissioner of Income Tax, Patiala (the revenue) against M/s Industrial Cables (India) Ltd. (the assessee) for the assessment year 1985-86. The reference arises from an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, dated 21.10.1993. The dispute revolves around the allowability of a deduction for sales tax liability amounting to Rs. 5,70,481/-. This liability was paid by the assessee after the close of the accounting period but before the due date for filing the return under Section 139(1) of the Income-tax Act, 1961. The ITAT had allowed this deduction.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding the first proviso to section 43B of the Income-tax Act to be applicable retrospectively and, on that basis, allowing deduction of sales tax liability amounting to Rs. 5,70,481/- which was paid by the assessee after the close of the accounting period but before due date for filing of return u/s. 139(1) of the Income-tax Act, 1961? Assessee's contention: The assessee argued that the sales tax liability, though paid after the year-end, was deductible as it was paid before the due date for filing the return, and the first proviso to Section 43B should apply retrospectively. The ITAT had accepted this position. Revenue's contention: The revenue challenged the ITAT's decision, questioning the retrospective applicability of the first proviso to Section 43B and the consequent allowance of the deduction.

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. No.356 of 1995 Date of decision: 08.11.2006 The Commissioner of Income Tax, Patiala. ---Applicant Vs. M/s Industrial Cables (India) Ltd. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE RAJESH BINDAL Present: Dr. N.L. Sharda, Advocate for the revenue. Ms. Rimpi Chaudhary, Advocate for Mr. Pankaj Jain, 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 21.10.1993 in I.T.A. No.284/Chandi/89 in respect of assessment year 1985-86:- “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding the first proviso to section 43 B of the Income-tax Act to be applicable retrospectively and, on that basis, allowing deduction of sales tax liability amounting to Rs. 5,70,481/- which was paid by the assessee after the close of the accounting period but before due date for filing of return u/s. 139(1) of the Income-tax Act, 1961?” 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..

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

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