THE COMMISSIONER OF INCOME TAX LDH vs. M/S RITA MECHANICAL WORKS LDH

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ITR/381/1995HC Punjab & HaryanaPHHC01032455199527 October 2006Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL1 pages
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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, reported in 1997 (224) ITR 677. Following this Supreme Court judgment, the High Court had previously decided a similar issue against the revenue and in favour of the assessee in ITR No.94 of 1996, The Commissioner of Income tax (C), Ludhiana v. M/s Avery Cycle Inds. Pvt. Limited, Ludhiana, vide its order dated September 5, 2006. Therefore, the question of law referred to the High Court was answered against the revenue and in favour of the assessee. The operative direction is to answer the reference accordingly.

What were the facts?

This case involves a reference to the High Court of Punjab and Haryana at Chandigarh concerning an order passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, dated January 11, 1995, in I.T.A. No.157/Chandi/90. The assessment year in question is 1985-86. The Commissioner of Income Tax (Central), Ludhiana, is the applicant (revenue), and M/s Rita Mechanical Works, Ludhiana, is the respondent (assessee). The dispute centers on the applicability of the first proviso to Section 43B of the Income Tax Act, 1961, as inserted by the Finance Act, 1987, with effect from April 1, 1988.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in allowing relief to the assessee by holding that the first proviso to Section 43B, inserted by the Finance Act, 1987 w.e.f. 1.4.1988, has retrospective application? Assessee's contention: The assessee contended that the ITAT was correct in allowing relief, as the first proviso to Section 43B should be applied retrospectively. The judgment does not record specific arguments made by the assessee's counsel or mention any specific authorities or precedents relied upon by the assessee. Revenue's contention: The revenue, represented by Mr. S.K. Garg Narwana, Advocate, challenged the ITAT's decision, arguing that the first proviso to Section 43B does not have retrospective application. The judgment does not record specific arguments made by the revenue's counsel or mention any specific authorities or precedents relied upon by the revenue.

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.381 of 1995 Date of decision: 27.10.2006 The Commissioner of Income Tax (Central), Ludhiana. ---Applicant Vs. M/s Rita Mechanical Works, 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. -----

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 11.01.1995 in I.T.A. No.157/Chandi/90 in respect of assessment year 1985-86:- “Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in allowing the relief to the assessee holding that the first proviso to Section 43B inserted by the Finance Act, 1987 w.e.f. 1.4.1988 has 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..

Accordingly, the question is answered against the revenue and in favour of the assessee. ( ADARSH KUMAR GOEL ) JUDGE October 27, 2006 ( RAJESH BINDAL ) ashwani JUDGE

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