ASSTT C I T vs. GUJARAT TELEPHONE CABLES LTD.

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TAXAP/82/2000HC GujaratGJHC24022602200024 July 2012Bench: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MS. JUSTICE HARSHA DEVANI3 pages
AI SummaryRemanded

What did the High Court hold?

The Gujarat High Court noted that the respondent company had gone into liquidation and that the counsel for the respondent would not appear further. The Court also observed that the disputed amount had substantially reduced, and the resultant effect would at best be a reduction in the huge loss of over Rs. 4 crores disclosed by the assessee. Considering these peculiar facts, the Court decided not to answer the questions framed while admitting the appeal. The appeal was disposed of without answering the questions.

What were the facts?

The appeal was filed by the Assistant Commissioner of Income Tax (Revenue) against the order of the Income Tax Appellate Tribunal (ITAT). The respondent assessee is Gujarat Telephone Cables Ltd. The assessment year is not explicitly stated but relates to unpaid liabilities under Section 43B. The Revenue challenged the ITAT's decision that rectification under Section 154 was not competent to tax unpaid liabilities under Section 43B when amending an intimation under Section 143(1)(a). The ITAT had also held that the adjustment of unpaid liabilities was disputable and thus outside the purview of Section 143(1). The Gujarat High Court noted that the respondent company had gone into liquidation. The disputed amount was Rs. 6,60,875/-. The assessee had disclosed a huge loss of over Rs. 4 crores for the year.

What were the issues?

1. Whether, the Appellate Tribunal is right in law and on facts in holding that by rectification under section 154 it was not competent to tax the unpaid liabilities under section 43B while amending the intimation given under section 143(1)(a)? 2. Whether the Appellate Tribunal erred in holding that adjustment of unpaid liabilities was disputable and hence not within the purview of adjustment under section 143(1) of the Act, and the Tribunal ought to have appreciated that unpaid liabilities were not allowable in view of the statutory provision contained in Section 43B? Assessee's contentions: The assessee argued that the adjustment of unpaid liabilities was disputable and therefore not within the scope of adjustments permissible under Section 143(1)(a). The assessee also implicitly relied on the ITAT's finding that rectification under Section 154 was not competent for this purpose. Revenue's contentions: The Revenue contended that the Assessing Officer validly exercised powers of rectification under Section 154. The Revenue also argued that unpaid liabilities were not allowable in view of Section 43B and that the ITAT erred in not appreciating this.

Which sections of the Income-tax Act were involved?

Section 154,Section 43B,Section 143(1)(a)

AI-generated summary — verify with the full judgment below

TAXAP/82/2000 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No.82 of 2000 For Approval and Signature: HONOURABLE MR.JUSTICE AKIL KURESHI HONOURABLE MS.JUSTICE HARSHA DEVANI ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment? 2 To be referred to the Reporter or not? 3 Whether their Lordships wish to see the fair copy of the judgment? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder? 5 Whether it is to be circulated to the civil judge? ========================================================= ASSTT C I T - Appellant(s) Versus GUJARAT TELEPHONE CABLES LTD. - Opponent(s) ========================================================= Appearance : MR MR BHATT, SR. ADV WITH MRS MAUNA M BHATT for the Appellant MR JP SHAH for the respondent. ========================================================= CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS.JUSTICE HARSHA DEVANI Date : 24/07/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE AKIL KURESHI)

TAXAP/82/2000 2/3 JUDGMENT When this appeal was taken up for hearing, learned counsel Shri JP Shah stated that the respondent-assessee company has gone into liquidation and he, therefore, would not appear for the said Company any longer. We have heard learned counsel Mr.M.R.Bhatt for the Revenue. In the facts of the case, we are not inclined to issue notice to the Official Liquidator of the respondent Company. The questions framed while admitting the appeal are as under:

"1.Whether, the Appellate Tribunal is right in law and on facts in holding that by rectification under section 154 it was not competent to tax the unpaid liabilities under section 43B while amending the intimation given under section 143(1)(a).

2.

Whether the Appellate Tribunal erred in holding that adjustment of unpaid liabilities was disputable and hence not within the purview of adjustment under section 143(1) of the Act, and the Tribunal ought to have appreciated that unpaid liabilities were not allowable in view of the statutory provision contained in Section 43B?"

Though two separate questions were framed, the central issue is with respect to exercise of powers under section 154 of the Income Tax Act by the Assessing Officer once he had previously made prima facie assessment in exercise of powers under section 143(1)(1) of the Act in the return of income filed by the assessee. The Assessing Officer, while making prima facie

TAXAP/82/2000 3/3 JUDGMENT adjustments had not made any adjustments towards total amount of Rs.23,13,745/- under section 43B of the Act. However, it has come on record that out of such amount, substantial amount came to be paid though after 31.3.90, but before the due date. It appears that the dispute thereafter remained only with respect to Rs.6,60,875/-. Though the counsel for the Revenue vehemently contended that the Assessing Officer validly exercised powers of rectification under section 154, we are not inclined to go into such question in the present appeal looking to the peculiar facts of the case. As already noted, the respondent Company had gone into liquidation. The disputed amount stands substantially reduced in view of the above noted facts. From the record, we further notice that the respondent Company had disclosed huge loss of more than Rs.4 crores during the year under consideration. In any case, the resultant effect would at the best be to reduce such loss. In the facts of the case, therefore, we dispose of the appeal without answering the question framed. (Akil Kureshi, J.) (Harsha Devani, J.) (vjn)

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