C I T Vs. H C LTD

JUDGEMENT

(1.) BY this Reference Application under Section 256 (2) of the Income Tax Act, the Income Tax Appellate Tribunal, Delhi has referred the Reference Nos.679 & 680/Delhi/1992 for the esteemed opinion of this Hon'ble High Court on the following question: -

(2.) THE brief facts of the case are that during the assessment years under consideration (1981 -82 and 1983 -84), the assessee claimed that interest charge under sections 139(8) and 215 of the Income Tax Act is excluded from the tax in the computation of chargeable profits under the Companies (Profits) Surtax Act, 1964 but the A.O. has not allowed the claim of the assessee. However, the first Appellate Authority as well as the Tribunal have allowed the claim of the assessee by observing that the interest under section 215 of the Income Tax Act was part and parcel of the income tax and, therefore, was deductible along with the income tax while computing the chargeable profit as per Rule 2(1) of the First Schedule to the Companies (Profits) Surtax Act, 1964. Still not being satisfied the Department has moved the present References.

(3.) WITH this back ground, Sri R.K. Upadhyay, the learned counsel for the Department has justified the order passed by the A.O. He submits that as per the ratio laid down in the case of Shree Pipes Vs. Deputy Commissioner of Income Tax, 2007 289 ITR 154, the interest accrued on delayed payment of tax which is otherwise allowable as deduction under the provisions of the Income Tax Act while computing the total income is part of tax within the meaning of section 43B. The liability to interest due was not allowable.