SHREE PIPES Vs. DEPUTY COMMISSIONER

JUDGEMENT

(1.) HEARD the learned Counsel for the parties.

(2.) THIS appeal is by the assessee against the order of the Income -tax Appellate Tribunal, Jodhpur Bench, Jodhpur, dated September 19, 2003. This appeal is confined to the claim of the assessee for deduction of liability of interest that has accrued on outstanding dues under the Rajasthan Sales Tax Act as well as the Income -tax Act which has been rejected by the Assessing Officer and affirmed in appeal by the Tribunal that unless the liability of interest is discharged in terms of Section 43B(a) of the Act, the assessee is not entitled to claim deduction under Section 37 of the Income -tax Act, 1961. The controversy is reflected in the following question that has been framed at the time of admitting appeal: Whether, on the facts and circumstances, the Tribunal was justified in not allowing the interest of Rs. 3,76,654 which has become due on delayed payment of sales tax payable by the assessee as deduction by considering it as 'tax' within the meaning of Section 43B of the Income -tax Act, 1961?

(3.) SECTION 43B(a) in its plain and unambiguous terms puts a condition only in respect of tax, duty, fee or cess that the same is paid in terms of Section 43B on or before the statutory time. Failure to make payment of tax, duty, cess or fee which is otherwise deductible in terms of Section 43B within the statutory period would forfeit the claim of deduction on such accrued liability on account of levy of tax, duty, cess or fee under Section 37 only on the basis of accrual notwithstanding the assessee follows the mercantile system of accounting or cash system of accounting. In support of his contention, he placed reliance on the following cases: CIT v. Orient Beverages Ltd. : (2003)ILLJ319Cal ; Russel Properties P. Ltd. v. CIT : [1982]137ITR358(Cal) ; CIT v. Padmavati Raje Cotton Mills Ltd. : [1999]239ITR355(Cal) ; CIT v. E.L. Properties P. Ltd. : [2001]248ITR14(Cal) ; Pratibha Processors v. Union of India : 1996(88)ELT12(SC) ; and Harshad Shantilal Mehta v. Custodian : [1998]231ITR871(SC) .