9911796707
|
Home
Issues: Disallowance of interest under section 143(1)(a) of the Income-tax Act, 1961 for the assessment year 1997-98.
The appeal involved a dispute concerning the disallowance of interest outstanding at the end of the previous year under section 143(1)(a) of the Income-tax Act, 1961. The assessee argued that the disallowance was not justified as the interest had been re-scheduled under a revival scheme by the creditor, resulting in a fresh loan with a repayment schedule spread over three years. The Departmental Representative, however, supported the disallowance by citing a Kerala High Court decision and contending that the disallowance was permissible as the interest had not been paid during the previous year. The Departmental Representative also referenced the Karnataka High Court decision and the Madras High Court decision to support the Assessing Officer's stance. The Tribunal agreed with the Revenue's position, emphasizing the applicability of section 43B and the distinction between incurring liability and actual payment. The Tribunal highlighted that the Madras High Court decision regarding conversion of sales tax liability into loans did not extend to interest payment liabilities under section 43B. The Tribunal rejected the assessee's argument that the loan restructuring constituted constructive discharge of the interest liability and upheld the disallowance under section 143(1)(a) based on the Madras High Court decision. The Tribunal acknowledged the efforts of the Departmental Representative in presenting the Revenue's position with reference to relevant case laws. Ultimately, the Tribunal dismissed the appeal of the assessee, aligning with the interpretation of the law as per the Madras High Court decision and upholding the disallowance of interest under section 143(1)(a) for the assessment year in question.
|
