Gujarat High Court Judgments — 1998

The High Court held that the Income Tax Appellate Tribunal was justified in confirming the order of the CIT(A) and directing the ITO to allow depreciation and investment allowance on the total cost of assets without deducting the subsidy. The Court reasoned that the subsidy was granted as an incentive to encourage entrepreneurs to establish industries in backward areas, and the specified percentage of fixed capital cost used to quantify the subsidy was merely a measure of financial aid, not a payment directly or indirectly meeting any portion of the actual cost. Therefore, the amount of subsidy was not to be deducted from the actual cost under section 43(1) for the purpose of calculating depreciation and investment allowance. The Court relied on its own prior decision in CIT vs. Grace Papers Industries Pvt. Ltd. and the Supreme Court's decision in CIT vs. P.J. Chemicals Ltd. The question referred to the Court was answered in the affirmative against the Revenue. The Reference was disposed of.

The High Court answered both questions in the affirmative, in favour of the assessee and against the Revenue. The Court referred to its earlier decision in I.T.R. No. 206 of 1985 dated 13.02.1998, where it had held that bottles and crates used by an assessee in its business were indeed "plant". Consequently, the assessee was entitled to claim depreciation under section 32(1)(ii) of the Act. The Court further held that the entire purchase price of these bottles and containers was allowable as depreciation under section 32(1)(ii). The reference was disposed of accordingly, with no order as to costs.

The High Court held that the Appellate Tribunal was right in law and on facts. The Court referred to the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. and this High Court's earlier decision in C.I.T vs. Chandulal Venechand. In Chandulal Venechand, the Court had construed Section 43-B and its proviso, holding that a liability incurred in the last quarter of a previous year would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return under Section 139(1) for that relevant previous year. The Supreme Court had approved this view. Therefore, the question referred to the High Court was answered in the affirmative, in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the question referred to it stands concluded by the decision of the Supreme Court in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43-B, stating that its proviso related back to the section's commencement date (April 1, 1984). Consequently, a sales tax liability would be allowable as a deduction if the assessee proved it was paid before the due date for furnishing the return under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favor of the assessee and against the Revenue.

The High Court held that reimbursement of medical and telephone expenses to managing directors constituted benefits within the meaning of Section 40(c)(i) read with Section 40A(5), and therefore, the Tribunal erred in not disallowing them. Question 1 was answered in the negative against the assessee for these two items. Regarding accident insurance premiums, the Court found no error in the Tribunal's view that it was not a benefit or perquisite, answering this part of Question 1 in the affirmative against the Revenue. For Question 2, the Court held that expenses incurred for a feasibility report for a project that did not materialize are not deductible as business expenditure, overturning the Tribunal's decision and answering the question in the negative against the assessee. On Question 3, the Court held that depreciation is admissible on RCC roads treated as buildings under Section 32, but development rebate is not admissible under Section 33 as roads are not mentioned therein, thus partly answering the question in favour of the assessee (depreciation) and partly in favour of the Revenue (development rebate). For Question 4, the Court found that the Tribunal erroneously relied on a previous order concerning development rebate, which did not address Section 80I claims. The Court held that the Tribunal committed an error in allowing the Section 80I relief and answered the question in the negative, leaving it open for the Tribunal to consider the claim afresh.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The High Court's own prior decision in C.I.T. vs. Chandulal Venechand, which was approved by the Supreme Court, had taken the view that the proviso to Section 43-B related back to the date Section 43-B came into operation, i.e., April 1, 1984. Consequently, such liability would be allowable as a deduction if the assessee proved it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year in which the liability was incurred. The High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. No issue was left undecided.

The High Court held that the Appellate Tribunal was right in law and on facts. The Court's decision was based on the settled legal position established by the Supreme Court in Allied Motors (P) Limited vs. C.I.T., which approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43B, including its proviso, to mean that a liability incurred in a previous year would be allowable as a deduction if it was actually paid before the due date for furnishing the return of income under Section 139(1) for that relevant previous year. Therefore, if the unpaid sales tax liability for the last quarter was paid within the time stipulated for filing the return, Section 43B would not be invoked to disallow the deduction. The question referred to the Court was answered in the affirmative in favour of the assessee and against the Revenue. The Reference was disposed of accordingly.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. (224 ITR 677). This Supreme Court decision had approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand (209 ITR 7). In Chandulal Venechand, the High Court had interpreted Section 43B, including its proviso, to mean that a sales tax liability incurred in a previous year would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for that relevant previous year. Therefore, the Tribunal's view was upheld. The question is answered in the affirmative in favour of the assessee and against the Revenue. No issue was expressly left undecided.

The High Court held that the question referred to it stands concluded by the decision of the Hon'ble Supreme Court in Allied Motors (P) Limited vs. C.I.T., which approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted the proviso to Section 43B to mean that it related back to the date of operation of Section 43B (April 1, 1984). Consequently, such liability would be allowable as a deduction if the assessee proved it was discharged by actual payment before the due date for furnishing the return under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the question referred to it stands concluded by the decision of the Hon'ble Supreme Court in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the view expressed by the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43B, including its proviso, to mean that a liability would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the High Court's view in C.I.T. vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43B to mean that its proviso related back to the date Section 43B came into operation (April 1, 1984). Consequently, such liabilities would be allowable as a deduction if the assessee proved they were discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T., which approved the High Court's own view in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43B, including its proviso, to mean that a sales tax liability incurred in a previous year would be allowable as a deduction if it was actually paid before the due date for furnishing the return of income under Section 139(1) for that relevant previous year. Therefore, the High Court answered the referred question in the affirmative, in favor of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the High Court's view in C.I.T. vs. Chandulal Venechand. In Chandulal Venechand, the High Court had interpreted Section 43B, including its proviso, to mean that a liability incurred would be allowable as a deduction if it was discharged by actual payment before the due date for filing the return of income under Section 139(1) for the relevant previous year. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. (224 ITR 677). This Supreme Court decision approved the High Court's own view in C.I.T vs. Chandulal Venechand (209 ITR 7). In Chandulal Venechand's case, the High Court had interpreted Section 43-B of the Income Tax Act, holding that the proviso related back to the commencement of Section 43-B (April 1, 1984). Consequently, a liability would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the question referred to it stands concluded by the decision of the Hon'ble Supreme Court in Allied Motors (P) Limited vs. C.I.T., reported in 224 ITR 677. This Supreme Court decision approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand, reported in 209 ITR 7. In Chandulal Venechand's case, the High Court had interpreted Section 43-B, including its proviso, to mean that a liability incurred in a previous year would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for that relevant previous year. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43B to mean that the proviso related back to the section's commencement date (April 1, 1984). It was held that such liability would be allowable as a deduction if the assessee proved it was discharged by actual payment before the due date for furnishing the return under Section 139(1) for the previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The Court also referred to its own earlier decision in C.I.T. vs. Chandulal Venechand, which was approved by the Supreme Court. In Chandulal Venechand's case, the High Court had interpreted Section 43-B to mean that its proviso related back to the date of operation of Section 43-B, i.e., April 1, 1984. Consequently, a liability incurred in a previous year would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for that relevant previous year. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the question referred to it stands concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The Court also referred to its own prior decision in C.I.T vs. Chandulal Venechand, which was approved by the Supreme Court. In Chandulal Venechand's case, the Court had interpreted Section 43-B, including its proviso, to mean that a sales tax liability incurred in a previous year would be allowable as a deduction if it was actually paid before the due date for furnishing the return of income under Section 139(1) for that relevant previous year. Therefore, the High Court answered the referred question in the affirmative, in favor of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the Appellate Tribunal was right in law and on facts. The Court referred to the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T., which upheld the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43B to mean that the proviso relates back to the commencement of Section 43B (April 1, 1984). Consequently, a liability would be allowable as a deduction if the assessee proved it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the question referred to the Court was answered in the affirmative in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. (224 ITR 677), which approved the High Court's own view in C.I.T vs. Chandulal Venechand (209 ITR 7). In Chandulal Venechand's case, it was held that the proviso to Section 43B related back to the commencement of Section 43B on April 1, 1984. Consequently, a liability would be allowable as a deduction if the assessee proved it was discharged by actual payment before the due date for filing the return under Section 139(1) for the relevant previous year. Therefore, the Tribunal was correct in holding that if payment was made within the due date for filing returns under Section 139(1), Section 43B could not be resorted to. The question was answered in the affirmative in favour of the assessee and against the Revenue. The reference was disposed of with no order as to costs.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T., which approved the High Court's own view in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had construed Section 43B to mean that its proviso related back to the date Section 43B came into operation, i.e., April 1, 1984. Therefore, a liability would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return under Section 139(1) for the relevant previous year in which the liability was incurred. Consequently, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue.

The High Court held that the question referred to it stands concluded by the decision of the Supreme Court in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted the proviso to Section 43B to relate back to the commencement of Section 43B (April 1, 1984). It was held that such a sales tax liability would be allowable as a deduction if the assessee proved actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the question referred to it stands concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. (224 ITR 677). This Supreme Court decision approved the High Court's own view in C.I.T vs. Chandulal Venechand (209 ITR 7). In Chandulal Venechand's case, the High Court had interpreted Section 43B, including its proviso, to mean that a sales tax liability incurred in a previous year would be allowable as a deduction if it was actually paid before the due date for furnishing the return of income under Section 139(1) for that relevant previous year. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The reference is disposed of accordingly.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The Court also referred to its own earlier decision in C.I.T vs. Chandulal Venechand, which was approved by the Supreme Court. In Chandulal Venechand's case, the Court had interpreted Section 43B and its proviso to mean that a liability would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favor of the assessee and against the Revenue.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the High Court's view in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43B to mean that its proviso related back to the date Section 43B came into operation (April 1, 1984). Consequently, such a liability would be allowable as a deduction if the assessee proved it was discharged by actual payment before the due date for furnishing the return under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue.

The High Court held that the question referred to it stands concluded by the decision of the Hon'ble Supreme Court in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43B, including its proviso, to mean that a liability would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the Tribunal was correct in its holding. The question is answered in the affirmative, in favour of the assessee and against the Revenue. The reference stands disposed of accordingly.

The High Court held that the question referred to it was concluded by the decision of the Supreme Court in Allied Motors (P) Limited vs. C.I.T. The High Court's own earlier decision in C.I.T vs. Chandulal Venechand, which was approved by the Supreme Court, was the basis for this conclusion. In Chandulal Venechand's case, the High Court had interpreted Section 43B to mean that its proviso related back to the date Section 43B came into operation (April 1, 1984). Consequently, a liability would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the Tribunal was right in allowing the sales tax as a deduction. The question is answered in the affirmative in favour of the assessee and against the Revenue. No issue was expressly left undecided.

The High Court held that the question referred to it stands concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The Court noted that the Supreme Court had approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43B, including its proviso, to mean that a liability incurred in a previous year would be allowable as a deduction if it was actually paid before the due date for furnishing the return of income under Section 139(1) for that relevant previous year. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T., which approved the High Court's own earlier view in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted the proviso to Section 43B to relate back to the section's commencement date (April 1, 1984). It was held that such a liability would be allowable as a deduction if the assessee proved actual payment before the due date for furnishing the return under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue.

The High Court addressed each question based on its prior decision in the assessee's own case (ITR 88/83). Regarding Question 1, the Court held that medical expenses and telephone expenses paid to the Managing Directors constituted benefits within Section 40(c)(i) and were therefore disallowable under Section 40(c) read with Section 40A(5). Thus, the Tribunal erred in not disallowing these two items, and the question was answered in the negative against the assessee. However, concerning accident insurance premium, the Court upheld the Tribunal's decision to allow the entire expenses, answering the question in the affirmative against the Revenue. For Question 2, the Court affirmed the Tribunal's finding that the assessee was entitled to development rebate at a higher rate for machinery installed in its Machinery Division, answering the question in the affirmative against the Revenue. Finally, for Question 3, the Court, following the Supreme Court's decision in 227 ITR 464, held that the guarantee commission paid to ICICI was revenue expenditure. The Tribunal had erred in holding otherwise, and the question was answered in the negative in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the question referred to it was concluded by the decision of the Hon'ble Supreme Court in Allied Motors (P) Limited vs. C.I.T., reported in 224 ITR 677. This Supreme Court decision had approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand, reported in 209 ITR 7. In Chandulal Venechand's case, the High Court had interpreted Section 43B to mean that the proviso related back to the date of operation of Section 43B, i.e., April 1, 1984. Consequently, a liability incurred in a previous year would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for that relevant previous year. Therefore, the High Court answered the referred question in the affirmative, in favor of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the High Court's own view in C.I.T vs. Chandulal Venechand. In Chandulal Venechand, the High Court had interpreted Section 43B, including its proviso, to mean that a liability incurred in a previous year would be allowable as a deduction if it was actually paid before the due date for furnishing the return of income under Section 139(1) for that relevant previous year. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the question referred to it was concluded by the decision of the Hon'ble Supreme Court in Allied Motors (P) Limited vs. C.I.T., reported in 224 ITR 677. The Supreme Court had approved the view expressed by the Gujarat High Court in C.I.T vs. Chandulal Venechand, reported in 209 ITR 7. In Chandulal Venechand's case, the High Court had interpreted Section 43B, including its proviso, to mean that such liability would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the Appellate Tribunal was right in law and on facts. The Court's decision was based on the settled legal position established by the Supreme Court in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted the proviso to Section 43-B to mean that it related back to the date Section 43-B came into operation (April 1, 1984). Consequently, a sales tax liability incurred in a previous year would be allowable as a deduction if the assessee proved it was paid before the due date for furnishing the return of income under Section 139(1) for that relevant previous year. Therefore, the question referred to the Court was answered in the affirmative, in favour of the assessee and against the Revenue.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. (224 ITR 677). This Supreme Court decision approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand (209 ITR 7). In Chandulal Venechand's case, the High Court had interpreted Section 43-B to mean that the proviso related back to the operation of Section 43-B from April 1, 1984. Consequently, a liability would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the High Court's own view in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court, while interpreting Section 43-B, held that the proviso related back to the commencement of Section 43-B (April 1, 1984). Consequently, a liability would be allowable as a deduction if the assessee proved it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue.

The High Court held that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. (224 ITR 677), which approved the High Court's own view in C.I.T. vs. Chandulal Venechand (209 ITR 7). In Chandulal Venechand's case, the High Court had interpreted Section 43-B to mean that the proviso related back to the commencement of Section 43-B (April 1, 1984). Consequently, such liabilities would be allowable as deductions if the assessee proved actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year. Therefore, the High Court affirmed the Tribunal's decision, holding that if payment was made within the due date for filing returns under Section 139(1), Section 43-B could not be invoked. The reference was answered in the affirmative against the Revenue.

The High Court held that the question referred to it stands concluded by the decision of the Hon'ble Supreme Court in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43B and its proviso. It was held that the proviso related back to the date of operation of Section 43B (April 1, 1984). Consequently, such a sales tax liability would be allowable as a deduction if the assessee proved it was actually paid before the due date for furnishing the return of income under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue.

The High Court of Gujarat answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The Court found that the issue was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the High Court's earlier view in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had held that the proviso to Section 43-B related back to the section's commencement date (April 1, 1984). Consequently, a sales tax liability would be allowable as a deduction if the assessee proved it was discharged by actual payment before the due date for furnishing the return under Section 139(1) for the relevant previous year in which the liability was incurred. The reference was disposed of accordingly.

The High Court held that the Appellate Tribunal was right in law and on facts. The question referred to the Court was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, it was held that the proviso to Section 43B related back to the date of its operation (April 1, 1984). Consequently, such liability would be allowable as a deduction if the assessee proved it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the question is answered in the affirmative, in favour of the assessee and against the Revenue. The reference stands disposed of accordingly.

The High Court held that the Appellate Tribunal was right in law and on facts. The Court found that the question referred to it was concluded by the Supreme Court's decision in Allied Motors (P) Limited vs. C.I.T., reported in 224 ITR 677. This Supreme Court judgment approved the High Court's own view in C.I.T vs. Chandulal Venechand, reported in 209 ITR 7. In Chandulal Venechand's case, the High Court had interpreted the proviso to Section 43B to mean that it related back to the date of operation of Section 43B (April 1, 1984). Consequently, a sales tax liability incurred in the last quarter would be allowable as a deduction if actually paid before the due date for furnishing the return of income under Section 139(1) for the relevant previous year. The ratio decidendi is that the proviso to Section 43B provides for deductibility of statutory liabilities paid before the due date of filing the return, irrespective of the previous year in which the liability was incurred.

The High Court held that the question referred to it stands concluded by the decision of the Hon'ble Supreme Court in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the view expressed by the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43B, including its proviso, to mean that a liability incurred in a previous year would be allowable as a deduction if it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for that relevant previous year. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

The High Court held that the Appellate Tribunal was right in law and on facts. The Court's decision was based on the settled legal position established by the Supreme Court in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43B to mean that its proviso related back to the section's commencement date (April 1, 1984). Consequently, a sales tax liability would be allowable as a deduction if the assessee proved it was actually paid before the due date for furnishing the return under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the question referred to the Court was answered in the affirmative, favoring the assessee and against the Revenue. No specific operative directions were given as the matter was disposed of based on the legal precedent.

The High Court held that the question referred to it stands concluded by the decision of the Hon'ble Supreme Court in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the view expressed by the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had interpreted Section 43B, particularly its proviso, to mean that it related back to the date of operation of Section 43B (April 1, 1984). Consequently, a liability would be allowable as a deduction if the assessee proved it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue.

The High Court held that the question referred to it is concluded by the decision of the Hon'ble Supreme Court in Allied Motors (P) Limited vs. C.I.T. The Supreme Court had approved the view of the Gujarat High Court in C.I.T vs. Chandulal Venechand. In Chandulal Venechand's case, the High Court had construed Section 43B and its proviso. It was held that the proviso related back to the commencement of Section 43B (April 1, 1984). Consequently, such a sales tax liability would be allowable as a deduction if the assessee proved it was discharged by actual payment before the due date for furnishing the return of income under Section 139(1) for the relevant previous year in which the liability was incurred. Therefore, the High Court answered the referred question in the affirmative, in favour of the assessee and against the revenue.

The High Court held that the Tribunal was correct in answering both questions in favour of the assessee. Regarding the first issue, the Court affirmed the Tribunal's decision that Section 43B would not apply to the unpaid sales tax of Rs. 9,68,948/-. This was based on the Supreme Court's decision in *Allied Motors (P) Ltd. vs. CIT*, which established the retrospective nature of the first proviso to Section 43B. The Court reiterated that if the liability is paid on or before the due date for furnishing the return of income, it is treated as paid in the previous year of incurrence. For the second issue, the Court found no error in the Tribunal's holding that the personal accident insurance premium was not a perquisite. Relying on *CIT vs. Lala Shridhar*, the Tribunal reasoned that the policy was taken out by the company, and it was not shown to be the director's personal desire or obligation to pay the premium. The amount involved was small (Rs. 913/-). The reference was disposed of accordingly.

The High Court answered all three questions in the affirmative, in favour of the assessee. Regarding the first issue, the Court held that the Tribunal was justified in allowing the tea and snack expenses under section 37(2B) of the Act, as they were considered hospitality and bare necessity, not lavish entertainment, aligning with the principles laid down in CIT vs. Patel Brothers and Company Ltd. and its Supreme Court affirmation. For the second issue, the Court affirmed the Tribunal's decision to allow the Rs. 17,10,000 expenditure on salary and wages arising from the Industrial Court award, based on its own decision in ITR No. 154 of 1983. Concerning the third issue, the Court upheld the Tribunal's grant of development rebate at 25% on the P.V.C. Plant, following its own precedent in Ahmedabad Manufacturing Co.Ltd. vs. CIT (162 ITR, 800), and stated that no question of law was involved in this matter. The reference was answered accordingly, with no order as to costs.

The High Court held that the Revenue's contention that the award became enforceable in the previous year 1971-72 was not raised earlier and was based on an erroneous premise that an award operates on its announcement date. The Court referred to Sections 17 and 17-A of the Industrial Disputes Act, 1947, explaining that an award becomes final and enforceable after publication and expiry of a 30-day period. The Court found that the liability to pay pursuant to the award had arisen and, not having been stayed, became operative and enforceable against the assessee in the relevant previous year. Merely challenging the award did not make it inoperative or unenforceable. Following the Supreme Court's decision in Kedarnath Jute Manufacturing Co. Ltd. (Supra), the Court held that the assessee's entitlement to deduction depends on the law, not the assessee's view or book entries. The liability remains intact even if appeals are filed. Therefore, the Tribunal was correct in allowing the deduction for the amount payable under the award, irrespective of it not being debited in the books of the relevant previous year. Both questions were answered in the affirmative, in favour of the assessee and against the Revenue.

The High Court held that the "assessed tax" for the purpose of computing interest under Section 215 of the Income Tax Act, 1961, is to be arrived at by reducing the tax determined on the basis of regular assessment by the amount of tax "deductible" at source, and not the tax actually deducted. The Court reasoned that the definition of "assessed tax" in Section 215(5) explicitly refers to tax "deductible" under various sections, including Section 194A, in relation to income subject to advance tax. The Court emphasized that the assessee cannot be expected to foresee that the statutory duty of deduction at source would not be fulfilled by the payer. If the machinery for collection through deduction at source fails, the assessee should not be penalized. The liability to pay interest under Section 215 is distinct from the liability of the deductor under Section 201(1A). The Court found no fault with the assessee proceeding on the assumption that the statutorily required deduction would be made. The Court affirmed the Tribunal's view, citing the Madras High Court's decision in CIT Vs. Madras Fertilizers Ltd. The Court answered all referred questions in the affirmative, in favour of the assessee and against the Revenue. No issue was expressly left undecided.

The High Court held that the question of law framed by the Revenue arises for consideration. Consequently, the Tribunal was directed to forward a statement of case in respect of this question. The High Court did not decide the merits of the disallowance itself but rather acknowledged the existence of a substantial question of law that warranted further examination by the High Court. The operative direction was to the Tribunal to prepare and forward the statement of case. No specific finding on the deductibility of the expenditure was made by the High Court at this stage.