C.I.T LDH. vs. M/S MARKANDA VANSAPATI MILLS LTD.

ITR/48/1993HC Punjab & HaryanaPHHC01021951199326 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 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, reported in 1997 (224) ITR 677. Following this precedent, the High Court had previously decided a similar issue against the revenue and in favour of the assessee in its order dated September 5, 2006, in ITR No. 94 of 1996, The Commissioner of Income tax (C), Ludhiana v. M/s Avery Cycle Inds. Pvt. Limited, Ludhiana. Therefore, the question of law referred to the court was answered against the revenue and in favour of the assessee. The operative direction was to answer the reference accordingly.

What were the facts?

This case concerns Income Tax Reference No. 48 of 1993, decided on October 26, 2006, by the High Court of Punjab and Haryana at Chandigarh. The applicant is the Commissioner of Income Tax (Central), Ludhiana, and the respondent is M/s Markanda Vanaspati Mills Ltd., Shahbad, Markanda. The assessment year in question is 1984-85. The reference arises from an order of the Income Tax Appellate Tribunal (ITAT), New Delhi, dated January 6, 1993, in I.T.A. No. 414/Del/1989. The dispute pertains to an addition made by the Assessing Officer (AO) concerning sales tax and CST collected by the assessee but not deposited by the end of the accounting period, invoking Section 43B of the Income Tax Act.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in confirming the order passed by the CIT (Appeals) deleting the addition made by the Assessing Officer on account of sales-tax and CST collected by the assessee from customers but not deposited to the Government account by the end of the accounting period, by resort to the provisions of Section 43B? Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the confirmation of the CIT(Appeals)'s order implies the assessee argued that the addition was wrongly made. Revenue's Contention: The revenue contended that the AO was justified in making the addition under Section 43B as the sales tax and CST collected were not deposited by the end of the accounting period.

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.48 of 1993 Date of decision: 26.10.2006 The Commissioner of Income Tax (Central), Ludhiana. ---Applicant Vs. M/sMarkanda Vanaspati Mills Ltd., Shahbad, Markanda. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE RAJESH BINDAL Present: Mr. Yogesh Putney, Advocate for the revenue. -----

ORDER: Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, New Delhi, arising out of its order dated 06.01.1993 in I.T.A. No.414/Del/1989 in respect of assessment year 1984-85:- “Whether on the facts and in the circumstances of the case, the Tribunal was right in law in confirming the order passed by the CIT (Appeals) deleting the addition made by the Assessing Officer on account of the sales-tax CST collected by the assessee from the customers but not deposited to the Govt. Account by the end of the accounting period by resort to the provisions of section 43B?”

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

The order continues below.

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