C.I.T. LDH. vs. SUKHCHAIN & CO.

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ITR/90/1996HC Punjab & HaryanaPHHC01035067199619 September 2006Bench: 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. Consequently, the question of law referred to the High Court is answered against the revenue and in favour of the assessee. The operative direction is to answer the reference accordingly, implying that the Tribunal's order allowing the deduction is upheld. No issue was expressly left undecided.

What were the facts?

The Commissioner of Income Tax (Central), Ludhiana (the revenue) has filed an Income Tax Reference (ITR) No. 90 of 1996 before the High Court of Punjab and Haryana at Chandigarh. The reference arises from an order dated 11.07.1994 passed by the Income Tax Appellate Tribunal, Chandigarh Bench, in I.T.A. No. 961/Chandi/89 concerning the assessment year 1984-85. The core of the dispute pertains to the allowability of a deduction for sales tax payment. The Tribunal had allowed this deduction, holding that the first proviso to Section 43B of the Income-tax Act, which was inserted with effect from April 1, 1988, had retrospective application.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing deduction of payment of sales-tax under the first proviso to section 43B of the Income-tax Act, after holding that the said proviso inserted w.e.f. 1.4.1988 had retrospective application? The revenue's contention, as implied by the reference, is that the Tribunal erred in allowing the deduction by applying the proviso retrospectively. The assessee's position, as indicated by the Tribunal's order, is that the proviso should indeed be applied retrospectively, thereby allowing the deduction for sales tax payment. The judgment does not explicitly detail the arguments presented by each side before the High Court, but the question posed by the Tribunal frames the central legal debate.

Which sections of the Income-tax Act were involved?

Section 43B

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. No.90 of 1996 Date of decision: 19.09.2006 C.I.T. (C), Ludhiana ---Appellant Vs. Sukhchain & Co., 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. ----- 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 11.07.1994 in I.T.A. No.961/Chandi/89 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 allowing deduction of payment of sales-tax under the first proviso to section 43B of the Income-tax Act, after holding that the said proviso inserted w.e.f. 1.4.1988 had 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.

Accordingly, the question is answered against the revenue and in favour of the assessee. ( ADARSH KUMAR GOEL ) JUDGE September 19, 2006 ( RAJESH BINDAL ) ashwani JUDGE

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