9911796707
TMI Blog1981 (8) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... *** 7. The last two issues which arise in the appeal for the assessment year 1976-77 only are with regard to trading account addition of ₹ 14,000 and non-allowance of deduction in respect of interest paid under section 220(2) of the Income-tax Act, 1961 (hereinafter referred to the Act ), out of interest received by the assessee from the Government on delayed payment of refund in terms of section 244 of the Act. 8 to 11.****** 12. Regarding non-allowance of the interest paid under section 220(2), the facts briefly are that the assessee paid ₹ 18,597 under section 220(2) for delayed payment of income-tax dues. The assessee also received from the Government under section 244 ₹ 19,490 representing interest on delaye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was expenditure which was admissible under section 57(iii) of the Act also. On behalf of the revenue, Shri M.M. Prasad, argued that the interest paid on delayed payment of income-tax was not deductible in the computation of income from business in view of the decision of the Punjab and Harayana High Court in the case of CIT v. Oriental Carpet Manufacturers (India) (P.) Ltd. [1973] 90 ITR 373 . It was not also deductible under section 57(iii) since it could not be said that the amount in question represented expenditure incurred for the making or earning of income chargeable under the head income from other sources . The learned departmental representative pleaded that the AAC had rightly rejected that assessee s claim. 14. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest paid, are to be assessed under the head Income from other sources although the ITO seems to have assessed the amount received as income from business. The position thus is that while the Government retained the assessee s money and paid interest thereon, the assessee, in the same way, retained the Government s money and paid interest thereon. Both had the same character and, therefore, if the interest received from the Government exceeded the interest paid by the assessee, then only net amount could be taxed. Similarly, if the interest received was less than the interest paid difference only should be allowed, while computing the income for other sources. The real income from interest has to be determined in this manner and to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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