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Issues involved: Appeal u/s 260A of the Income-tax Act, 1961 against the order of the Income-tax Appellate Tribunal for the assessment year 1996-97 regarding disallowance of accrued interest under section 43B.
Background: The assessee declared a total loss in the return of income, with interest payments to financial institutions debited but remaining unpaid. The Assessing Officer disallowed the unpaid amount under section 43B. The CIT (A) upheld the disallowance, leading to an appeal before the ITAT where the assessee argued that the interest payments were not yet due and the issue was debatable. Key Points: The main issue was whether the assessing authority was justified in disallowing the accrued interest claimed by the assessee. Section 43B of the Act mandates deductions only upon actual payment, as per the terms of the loan agreement. The language of the provision is clear and unambiguous, requiring actual payment for deduction. Since the interest amounts were payable in the succeeding assessment year and not the current year, the claim for accrued interest was deemed inadmissible. Decision: The appellant-assessee had not paid the sum to the financial institution, thus clause (d) of section 43B was not applicable. The disallowance of the interest payment was deemed permissible based on the provisions of the Act and the material on record. The appeal was dismissed as it did not raise any legal questions, with no costs awarded.
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