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TMI Blog2012 (1) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... 91 and the Tax Case (Appeal) No.521 of 2005 relates to the assessment year 1992-93. 3. The substantial question of law raised in both the tax case appeals is, Whether on the facts and circumstances of the case, the Tribunal was right in holding that the BIFR's recommendation to the department to consider granting exemption from the provisions of Section 43B should be treated as a mandate ? 4. The respondent assessee had taken over M/s.Press Metal Corporation as per the scheme sanctioned by the Board for Industrial and Financial Reconstruction (BIFR) in terms of section 18(4) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as 'SICA'). The assessee claimed deduction under section 43B of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CA refers only to the "provisions of this Act, and of any rules or schemes" made thereunder and not to orders passed under section 17(2). Hence, it was clarified that the orders passed by the BIFR under section 17(2) will not have the effect of overriding the provisions of the Income Tax Act. However, subsequently, by Circular No.576 dated 31.08.1990, it was further clarified that once the Scheme is sanctioned under section 18 of SICA by the Board, it will have overriding effect over the provisions of the Income tax Act in regard to the matters covered in Circular No.523 dated 05.10.1988. 7. A reading of both the circulars would show that in the event a scheme has been sanctioned by the Board, the Scheme will have overriding effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made. Accordingly we allow the interest payable under section 43B. 10. Section 43B starts with non-obstente clause and it reads that "Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of any sum payable by the assessee as interest on any loan or borrowing from any public financial institutions or a State financial corporation or a State industrial investment corporation, in accordance with the terms and conditions of the agreement governing such loan or borrowing. This provisions is applicable only in respect of notwithstanding anything contained under the Income Tax Act and not any other Act. However, section 32 of SICA reads as under: 32: Effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Act. Section 32 does not make any difference in any provisions of the Income Tax Act, be it even the provisions of section 43B. Though under section 43B of the Income Tax Act, the assessing officer may not have any discretion to allow any deduction in respect of interest payable, it is the case of the revenue that by virtue of the provisions of section 32 of SICA, the assessee, who has taken over the sick industry, would have the benefit of the provisions of the scheme. In this regard, we may also refer the judgment of the Calcutta High Court, taking a similar view, reported in (2011) 331 ITR 303 in the case of COMMISSIONER OF INCOME TAX .vs. J.K.CORPORATION LTD. 12. It is also contended that even assuming that the Scheme ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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