Commissioner of Income Tax vs Gujarat Carbon (P) Ltd.

M.S. Shah, J.

In this reference at the instance of the revenue, the following questions have been referred for our opinion in respect of the assessment year 1984-85 :

"1. Whether the Appellate Tribunal is right in law and on facts in holding that the amount of Rs. 77,69,521 paid for royalties to collaborators is allowable as revenue expenditure ?

Whether the Appellate Tribunal is right in law and on facts in holding that if the unpaid sales tax liability pertaining to the last quarter is paid before the time prescribed for filing of return u/s 139(1), the provisions of section 43B cannot be invoked ?"

We have heard Mr. Manish R. Bhatt, the learned senior standing counsel for the revenue and Mr. Manish J. Shah, the learned counsel for the respondent-assessee.

As far as the first question is concerned, our attention is invited to the decision dated 5-12-2001 of this court in the case of this very assessee in Commissioner of Income Tax Vs. Gujarat Carbon Ltd., wherein this court had an opportunity to consider the same question for the assessment year 1980-81. After considering all the relevant materials and the decisions of the Apex Court, this court answered the question in favour of the assessee and held that amount paid for royalties to collaborators is a revenue expenditure and, accordingly, answered the question in favour of the assessee.

Following the aforesaid decision, our answer to question No. 1 is in the affirmative, i.e., in favour of the assessee and against the revenue.

Coming to question No. 2, our attention is invited to the decision of the Apex Court in Allied Motors (P.) Ltd. Vs. Commissioner of Income Tax, Delhi, . In the said decision, the Apex Court has held that if the sales tax liability pertaining to the last quarter of a previous year is paid after 31st March, i.e., in the first quarter of the next year but before the time prescribed for filing of return u/s 139(1) of the Income Tax Act, 1961, it must be treated as sufficient compliance of the requirement of making payment of the tax within the previous year and, therefore, the provisions of section 43B of the Act cannot be invoked.

Following the aforesaid decision, our answer to question No. 2 is in the affirmative, i.e., in favour of the assessee and against the revenue.

The reference, accordingly, stands disposed of with no order as to costs.