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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
Judges
Acts
  • Revenue u/s. 256(1) of the Income Tax Act,
  • u/s. 139(1) of the IT. Act, 1961.2.
  • FINANCE ACT 1989
  • section 43 B
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
Judges
Acts
  • Revenue u/s. 256(1) of the Income Tax Act,
  • u/s. 139(1) of the IT. Act, 1961.2.
  • FINANCE ACT 1989
  • section 43 B
Smart Summary

Factual and Procedural Background

The Tribunal, at the instance of the Revenue under section 256(1) of the Income Tax Act, 1961, referred a question regarding the allowance of relief for Sales Tax paid after the close of the accounting period but before the due date of filing the income tax return under section 139(1). The question arose in the context of Explanation 2 to section 43B, as inserted by the Finance Act, 1989, which has retrospective effect from 1.4.1984. The Tribunal had directed the Assessing Officer to allow such relief, and the legality of this direction was under challenge.

Legal Issues Presented

  1. Whether, in view of Explanation 2 to section 43B of the Income Tax Act, 1961 (retrospectively effective from 1.4.1984), the Tribunal erred in law by directing the Assessing Officer to allow relief for Sales Tax paid after the close of the accounting period but before the due date of filing the return under section 139(1) of the Income Tax Act, 1961.

Arguments of the Parties

Assessee's Arguments

  • The question has been answered in favour of the assessee by various High Courts, including Andhra Pradesh, Patna, Kerala, Orissa, Calcutta, and Gujarat High Courts.
  • These High Courts have held that relief for Sales Tax paid after the accounting period but before the due date of filing the return is allowable under Explanation 2 to section 43B.
  • Specific cases cited include S. Subba Rao v. Union of India, Jamshed Pur Motor Accessories v. Union of India, CIT v. P. Janardhanan Pillai, CIT v. Pyarilal Kasam Manjid Co., CIT v. Jagannath Steel Corporation, CIT v. Chandulal Venichand, Chief Commissioner (Admn) v. Sanjay Sater Syndicate, and CIT v. Govindaraja Reddiar.

Revenue's Position

  • The Delhi High Court decisions in Sanghi Motors v. Union of India and Escorts Ltd. v. Union of India were cited as authority against the assessee's position.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
S. Subba Rao v. Union of India, (1988) 173 ITR 708 (A.P.) Allowing relief for Sales Tax paid after accounting period but before return filing date under Explanation 2 to section 43B Followed as supporting assessee's claim for relief
Jamshed Pur Motor Accessories v. Union of India, (1991) 189 ITR 71 (Patna) Same as above Followed in favour of assessee
CIT v. P. Janardhanan Pillai, (1991) 189 ITR 165 (Kerala) Same as above Followed in favour of assessee
CIT v. Pyarilal Kasam Manjid Co., (1992) 198 ITR 110 (Orissa) Same as above Followed in favour of assessee
CIT v. Jagannath Steel Corporation, (1991) 191 ITR 679 (Calcutta) Same as above Followed in favour of assessee
CIT v. Chandulal Venichand, (1994) 209 ITR 7 (Gujarat) Same as above Followed in favour of assessee
Chief Commissioner (Admn) v. Sanjay Sater Syndicate, (1992) 197 ITR 255 (Kerala) Same as above Followed in favour of assessee
CIT v. Govindaraja Reddiar, (1991) 187 ITR 417 (Kerala) Same as above Followed in favour of assessee
Sanghi Motors v. Union of India, (1991) 187 ITR 703 (Delhi) Against allowing relief for Sales Tax paid after accounting period but before return filing date Not followed; represents minority view
Escorts Ltd. v. Union of India, (1991) 185 ITR 81 (Delhi) Same as above Not followed; represents minority view

Court's Reasoning and Analysis

The court considered the question referred by the Tribunal regarding the interpretation of Explanation 2 to section 43B of the Income Tax Act, 1961, particularly its retrospective effect from 1.4.1984. The court reviewed the divergent decisions of various High Courts on whether relief for Sales Tax paid after the accounting period but before the due date of filing the return should be allowed. The majority of High Courts had ruled in favour of the assessee, allowing such relief, while the Delhi High Court had taken the opposite view.

After hearing counsel and considering the precedents, the court aligned itself with the majority view of the High Courts favouring the assessee. It concluded that the Tribunal did not err in directing the Assessing Officer to allow the relief for the Sales Tax paid within the specified time frame.

Holding and Implications

The court answered the referred question in the affirmative, ruling in favour of the assessee and against the Revenue.

This decision affirms the allowance of relief for Sales Tax paid after the close of the accounting period but before the due date of filing the return under section 139(1), pursuant to Explanation 2 to section 43B. The ruling upholds the Tribunal's direction and resolves the conflicting High Court precedents by following the majority position. There is no order as to costs, and no new precedent beyond this decision is explicitly established.

    The Commissioner Of Income Tax / v. Bharat Bamboo & Timber Suppliers /Opposite-Party.

    1. The following question has been referred by the Tribunal at the instance of the Revenue u/s. 256(1) of the Income Tax Act, 1961.:

    “Whether on the facts and in the circumstances of the case and in view of the Explanation 2 to section 43 B as inserted by the Finance Act, 1989 giving retrospective effect from 1.4.1984, the Tribunal has not erred in law in directing the Assessing Officer to allow relief to the extent of the Sales Tax amount paid even after the close of the accounting period but before the due date of filing the return of income u/s. 139(1) of the IT. Act, 1961.”

    2. We have heard Mr. G.K Joshi, Senior standing counsel for the Income Tax Department and Dr. A.K Saraf, counsel for the assessee.

    3. Dr. Saraf submits that the question has been answered by different High Courts, namely, Andhra Pradesh High Court in S. Subba Rao v. Union of India, (1988) 173 ITR 708 A.P, Patna High-Court, in Jamshed Pur Motor Accessories v. Union of India, (1991) 189 ITR 71, Patna, Kerala High Court in CIT v. P. Janardhanan Pillai, (1991) 189 ITR 165, Orissa High Court in CIT v. Pyarilal Kasam Manjid Co., (1992) 198 ITR 110 Orissa, Calcutta High Court in CIT v. Jagannath Steel Corporation, (1991) 191 ITR 679, Gujarat High Court in CIT v. Chandulal Venichand, (1994) 209 ITR 7, Kerala High Court in Chief Commissioner (Admn) v. Sanjay Sater Syndicate, (1992) 197 ITR 255 and CIT v. Govindaraja Reddiar, (1991) 187 ITR 417. All these High Court answered the question in favour of the assessee and against the Department. However, the Delhi High Court answered the question against the assessee in Sanghi Motors v. Union of India, (1991) 187 ITR 703 Delhi, and in Escorts Ltd. v. Union of India, (1991) 185 ITR 81 Delhi.

    4. Following the majority decisions of High Courts stated above, we answer the question in affirmative, i. e. in favour of the assessee and against the Revenue.

    5. A copy of this judgment under the signature of the Registrar and seal of the High Court shall be transmitted to the Income tax Appellate Tribunal.

    6. In the facts and circumstances of the case, there will be no order as to costs.

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    Comments

    The Commissioner Of Income Tax / v. Bharat Bamboo & Timber Suppliers /Opposite-Party.
    (Jan 10, 1996)