Income Tax Appellate Tribunal - Ahmedabad
Commissioner Of Income-Tax vs New Gum Products (India) (P.) Ltd. on 25 March, 1992
Equivalent citations: [1993]44ITD261(AHD)
ORDER
P.J. Goradia, Accountant Member
1. By this reference application, the Commissioner of Income-tax, Gujarat-I, Ahmedabad requires the Appellate Tribunal to refer the following question, said to.be a question of law, and said to arise out of the order of the Tribunal, to the Hon'ble High Court for its esteemed opinion :
Whether, the Appellate Tribunal is right in law and on facts in holding that if the unpaid taxation liability pertained to the last quarter and if the same was paid within the time stipulated for furnishing of return under Section 139(1)* of the IT Act, the provisions of Section 43B cannot be invoked.
2. The Assessing Officer on the basis of Section 43B of the Act made disallowance of Rs. 6,945 in respect of unpaid sales-tax liability as on the last day of the previous year. This order was confirmed by the CIT (Appeals). However, the Tribunal taking into consideration the fact that the payment was made within the grace period allowable under the relevant Sales-tax Laws, though after the previous year ended yet placing reliance on similar decision in the case of Chandulal Venichand v. FTO [1991] 38 ITD 138 (Ahd.) deleted the disallowance.
3. We decline to draw statement of the case, though in our opinion a question of law does arise, for the reasons recorded by their Lordships of the Bombay High Court in CWT v. Executors of Late D. T. Udeshi [ 1991 ] 189 ITR 319, the portion of the judgment reads as under :
Learned counsel for the respondent-assessee, has been heard. He has pointed out that the tax effect, if the Department succeeds, is going to be of Rs. 37,381 for as many as six assessment years, i.e., from the assessment year 1973-74 to the assessment year 1978-79. The tax effect in no year exceeds Rs. 8,500. Referring then to Instruction No. 1573 issued by the Central Board of Direct Taxes, vide Circular F.No. 279/26/ 83-ITJ dated 12-7-1984, and Instruction No. 1764 issued by the Central Board of Direct Taxes, vide Circular F.No. 319/11/87-WT dated 14-7-1987, he submitted that, in a case where the tax effect is less than Rs. 30,000, the Board has taken a policy decision not to raise questions of law with a view to reduce litigations before High Courts and the Supreme Court. He has also referred to another instruction being Instruction No. 1569 dated 3-7-1984, issued by the Board which was noted in a Tribunal's decision dated 26-11-1986 (copy of the order placed on record), which instruction he was not able to produce. On going through all these instructions, we are satisfied that the Board has taken a policy decision not to file references in cases where the tax effect is going to be less than Rs. 30,000 per year. That being so, we discharge the rule.
4. In this case, the income was adjusted against loss of earlier assessment years 1979-80 and 1980-81 and there being balance loss required to be set off, the income was determined at Rs. nil. Besides, this being a private limited company, rate of tax will be constant. The tax effect would work out hardly Rs. 4,500 maximum in this year but then again it is an admitted position that deduction has to be allowed on the basis of payment in the subsequent assessment year and, therefore, the tax effect would get nullified. Therefore, no useful purpose would be served by making reference of such question of law.
5. In the result, the reference application is rejected.
K.R. Dixit, Judicial Member
1. I agree with the conclusion of my learned brother. But I would like to add a few lines. This is a case of carried forward loss. If the deduction of sales-tax is allowed this year the income to that extent would be reduced and less amount of loss would be set off this year so that a greater amount of loss will be carried forward to the next year. If the sales-tax amount is allowed in the next year the deduction would be allowed in the next year. Therefore, the sales-tax amount either as sales-tax or as carried forward loss would be deducted in the next year. The result, therefore, will be the same and therefore, it will make no difference whether the sales-tax amount is allowed to be deducted this year or in the next year. The Revenue, therefore, would have no real grievance. Therefore, the above question is not referabi.e., I refrain from making any reference to the decision of Bombay High Court in the case of Executors of Late D.T. Udeshi (supra).
2. The reference application is rejected.