2012 (12) TMI 1178 - AT - Income Tax

Summary

Issues involved: Challenge to correctness of Commissioner of Income Tax (Appeals) order u/s 143(3) for assessment year 2003-04 regarding disallowance of interest payable due to non-payment of W.B. Sales Tax within specified time and interest paid on Central Sales Tax.

Issue 1: Disallowance of interest payable due to non-payment of W.B. Sales Tax

The Assessing Officer challenged the deletion of disallowance of Rs. 26,72,243 on account of interest payable due to non-payment of W.B. Sales Tax within specified time. The Coordinate Bench in the assessee's own case for the assessment year 2002-03 had observed that the interest on sales tax was compensatory in nature and not penal. The ld. CIT(A) agreed with this contention and deleted the disallowance. The Tribunal found that the ld. Commissioner had followed the observations and decision of the Coordinate Bench, and since the matter was covered in favor of the assessee, the appeal by the Revenue was dismissed.

Issue 2: Disallowance of interest paid on Central Sales Tax

The Assessing Officer also challenged the deletion of disallowance of Rs. 3,660 on account of interest paid on Central Sales Tax. Similar to the first issue, the Coordinate Bench had previously ruled in favor of the assessee in a similar case for the assessment year 2002-03. The Tribunal noted that the ld. Commissioner had merely followed the decision of the Coordinate Bench, and as the matter was squarely covered by precedent, the appeal by the Revenue was dismissed.

In conclusion, the Appellate Tribunal upheld the decisions of the Commissioner of Income Tax (Appeals) regarding the disallowance of interest payable due to non-payment of W.B. Sales Tax and interest paid on Central Sales Tax for the assessment year 2003-04, based on the precedent set by the Coordinate Bench in the assessee's own case for the assessment year 2002-03.