C I T, PATIALA vs. M/S PB. BEVERAGES PVT. LTD., NEW DELHI

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ITR/92/1996HC Punjab & HaryanaPHHC01035069199622 November 2006Bench: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL1 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 (1997) 224 ITR 677. Following this precedent, the Court decided the question of law against the revenue and in favour of the assessee. The reasoning is based on the Supreme Court's ruling that the amendment to Section 43B, which made certain liabilities deductible if paid within the due date of filing the return of income, was retrospective in nature. Therefore, the sales-tax liability, if paid within the prescribed period, would be allowable. The operative direction was to answer the reference accordingly.

What were the facts?

This case concerns Income Tax Reference No. 92 of 1996, decided on November 22, 2006, by the High Court of Punjab and Haryana at Chandigarh. The petitioner is the Commissioner of Income-tax, Patiala, and the respondent is M/s Punjab Beverages Pvt. Ltd., New Delhi. The reference arises from an order dated May 19, 1995, of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, in I.T.A. No. 674/Chandi/1990, pertaining to the assessment year 1987-88. The core of the dispute revolves around the allowability of sales-tax liability under the amended provisions of Section 43B of the Income Tax Act, 1961.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that the sales-tax liability would be allowable under the amended provisions of Section 43B inserted w.e.f. 1.4.89 being retrospective in character? Assessee's Contention: The assessee contended that the sales-tax liability should be allowed as a deduction. The ITAT, in its order dated May 19, 1995, held in favour of the assessee, finding the amended provisions of Section 43B to be retrospective. Revenue's Contention: The revenue challenged the ITAT's decision, arguing that the sales-tax liability was not allowable under the amended Section 43B, questioning its retrospective application. The revenue sought to refer the matter to the High Court for an opinion on this legal question.

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

INCOME TAX REF. No. 92 of 1996 Date of decision:22.11.2006 The Commission of IncomeTax, Patiala ...Petitioner Versus M/S Punjab Beverages Pvt. Ltd., New Delhi ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE RAJESH BINDAL Present:Dr.N.L.Sharda, Advocate for the Revenue. **** JUDGMENT 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 19.5.1995 in I.T.A. No.674/Chandi/1990 in respect of assessment year 1987-88:- “Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that the sales-tax liability would be allowable under the amended provisions of Section 43B inserted w.e.f. 1.4.89 being retrospective in character? 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 November 22,2006 (Rajesh Bindal) Pka Judge

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