PARSHURAM AGARWALLA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE appeal was admitted on the following question of law :

(2.) THE above question of law arises in the following facts and circumstances that the assessee appellant has filed his return of income on 9th Dec., 1991, and the AO assessed the income of the assessee appellant under s. 143 of the IT Act, 1961. As the assessee could not deposit the amount of income-tax within the time fixed, he was charged with the interest of Rs. 18,984 over the non- payment of the income-tax. THE assessee claimed exemption of Rs. 18,984 for the asst. yr. 1991-92 of the interest paid because of the non-payment of income-tax in due time as business expenditure. THE assessing authority refused exemption to the appellant-assessee. Aggrieved by the said order, the assessee preferred an appeal before the CIT(A), Dibrugarh. THE appellate authority allowed the appeal of the assessee holding that the interest paid on non-payment of the tax in due time is business expenditure of the assessee and thus for the said amount the assessee is entitled to deduction. THE order of the CIT(A) gave rise for filing an appeal before the Tribunal. THE Tribunal has allowed the appeal filed by the Revenue holding that the interest paid on non- payment of the income-tax within time would not be a business expenditure and for this the assessee is not entitled to deduction. Aggrieved by the said order the assessee has filed the present appeal, which has been admitted on the aforesaid question of law.

(3.) IN the matter of Veneer Mills (P) Ltd. (supra) it has been held by this Court that the interest payable on the non-payment of sales-tax under the Assam Finance (ST) Act, 1956, is a part and parcel of the liability to pay sales-tax and as accretion thereto. This Court also held that it cannot be said to be a penalty. IN our view, this decision does not help the assessee it rather advances the point of view placed for consideration of the Court by the Revenue. On the facts found, this Court has held that the interest paid on the sales-tax is a part and parcel of the sales-tax being accretion thereto and thus, the interest paid on the sales-tax is sales-tax itself. On the same analogy the interest paid on the income-tax by the assessee is an accretion in the income-tax and would be part of the income-tax.