C.I.T. LDH. vs. M/S MUNAK OILS LTD.

ITR/596/1995HC Punjab & HaryanaPHHC01032601199518 October 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 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 favor 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 decided the issue against the revenue and in favor of the assessee. The Court had previously decided a similar issue against the revenue 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. Accordingly, the question of law referred to the Court was answered against the revenue and in favor of the assessee. The operative direction was to answer the reference in favor of the assessee.

What were the facts?

This case involves an Income Tax Reference (ITR) filed by the Commissioner of Income Tax (Central), Ludhiana (the revenue) against M/s Munak Oils Ltd., Chandigarh (the assessee). The reference arises from an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, dated May 18, 1994, concerning assessment year 1984-85. The dispute centers on the deductibility of Rs. 1,35,821. The ITAT had ruled that the first proviso to Section 43B, inserted by the Finance Act, 1987, with effect from April 1, 1988, had retrospective application, allowing the deduction if the amount was paid before the due date for filing the return.

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 holding that the first proviso to section 43B, inserted by the Finance Act, 1987 w.e.f. 1.4.1988, has retrospective application and that the assessee was entitled to deduction of Rs. 1,35,821/-, if paid before the due date for filing of return? Assessee's contention: The assessee argued that the proviso to Section 43B should be applied retrospectively, allowing the deduction of Rs. 1,35,821 as it was paid before the due date for filing the return. The ITAT's decision in favor of the assessee was based on this interpretation. Revenue's contention: The revenue challenged the ITAT's finding that the first proviso to Section 43B had retrospective application, thereby disputing the allowability of the deduction of Rs. 1,35,821.

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.596 of 1995 Date of decision: 18.10.2006 The Commissioner of Income Tax (Central), Ludhiana. ---Applicant Vs. M/s Munak Oils Ltd., Chandigarh. -----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 18.05.1994 in I.T.A. No.809 and C.O. No.82/Chd/1989 in respect of assessment year 1984-85:- “Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in building that the first proviso to section 43B inserted by the Finance Act, 1987 w.e.f. 1.4.1988 has retrospective application and that the assessee was entitled to deduction of Rs.1,35,821/-, if paid before due date for filing of return?”

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. Commi

The order continues below.

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