Karnataka H.C : hether, on the facts and in the circumstances of the case, particularly having regard to the changed provisions in the Karnataka Excise Act, 1965, especially the provisions of s. 24 of the said Act, the Tribunal was right in law in holding that ‘kist’ amount payable to the Government by the assessee could not be brought within the purview of the provisions of s. 43B of the IT Act, 1961 ?

High Court Of Karnataka

CIT vs. A.J. Shetty Family Trust

Section 43B

Asst. Year 1984-85

V.K. Singhal & T.N. Vallinayagam, JJ.

ITRC No. 631 of 1998

11th February, 2000

Counsel Appeared

M.V. Seshachala, for the Revenue

JUDGMENT

V.K. SINGHAL, J. :

The Tribunal has referred that following question of law arising out of its order dt. 3rd Oct., 1994, in respect of the asst. yr. 1984-85 :

“Whether, on the facts and in the circumstances of the case, particularly having regard to the changed provisions in the Karnataka Excise Act, 1965, especially the provisions of s. 24 of the said Act, the Tribunal was right in law in holding that ‘kist’ amount payable to the Government by the assessee could not be brought within the purview of the provisions of s. 43B of the IT Act, 1961 ?”

The fascts as stated by the Tribunal are that the assessee is a private trust in which shares of the beneficiaries are determinate and it carries on business in liquor line. For the asst. yr. 1984-85, the AO disallowed under s. 43B the unpaid “kist” amount holding that “kist” should actually be considered as tax or duty. The assessee went on appeal contending that the kist payments cannot be considered as tax or duty and hence the provisions of s. 43B would not be attracted. The CIT(A) upheld the contention of the assessee and allowed the appeal. Against this, the Department filed an appeal. The Tribunal upheld the decision of the CIT(A) and directed the deletion of disallowance under s. 43B. The Tribunal based its decision on the decision in the case of Dasappa & Co. in ITA No. 1234/Bang of 1988, dt. 9th June, 1994.

The controversy is now covered by the decision of this Court in the case of CIT vs. D. Dasappa (2000) 163 CTR (Kar) 410 : (2000) 246 ITR 750 (Kar)—I.T.R.C. No. 5 of 1996, decided on 5th January, 2000. Following the said decision, we are of the view that the Tribunal was right in law in holding that “kist” amount payable to the Government by the assessee could not be brought within the purview of the provisions of s. 43B of the IT Act, 1961.

The reference is answered in favour of the assessee and against the Revenue.

[Citation : 250 ITR 406 ]

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