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TMI Blog2016 (2) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... ng during the year (refer para 3.2 of the assessment order). On a perusal of the claim, the Assessing Officer (A.O.) in fact found that most of the invoices in respect of the said expenditure were from April, 2006 to March, 2007, i.e., falling during the relevant previous year itself. In fact, even in cases where the invoices were received subsequent to the close of the year, where prior to the finalization of the accounts or, for that matter, the return of income, furnished on 30.10.2007, the same could be claimed for the current year, i.e., per the return of income, irrespective of whether the same had been booked in accounts or not (refer: Kedarnath Jute Mfg. Co. Ltd. vs. CIT [1971] 82 ITR 363 (SC)). It is only in respect of the disputed sums, and to the extent of the amount in dispute, that the liability, which is claimable on the basis of a provision - making a reasonable and best estimate (based on the information available), that could be claimed on the basis of the amount as finally settled between the parties in-as-much as the liability to that extent could be said to arise or crystallize only in that year. Each year is a separate and independent unit of assessment (refer: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue is entitled and, rather, duty bound to proceed in the matter as if section 43B(f) is on the statute-book, i.e., as a constitutionally valid provision of law. The provision for any expenditure and, therefore, qua leave encashment, where on a scientific, objective basis, is allowable as an expenditure (refer, inter alia, Calcutta Co. Limited (supra); Bharat Earth Movers (supra)). Section 43B of the Act, however, introduces a legal fiction whereby, notwithstanding the deductibility of any expenditure, specified vide clauses (a) to (f) thereof, it shall stand to be allowed as deduction in computing the business income only subject to actual payment. Clause (f) specifies a sum payable in lieu of any leave at the credit of the employee of the assessee. Giving effect to the provision implies that no deduction on account of a provision for leave standing to the credit of the employee/s would stand to be allowed. The matter is, in fact, simple, admitting of no two views. Reference in this context may be made to the decision in the case of Prembril Engineering P. Ltd. vs. Dy. CIT [2015] 155 ITD 72 (Mum), on which reliance stands placed before us by the assessee; the Tribunal holding as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the same shall continue to hold in view of the decision in Exide Industries Ltd. (supra) against which the Hon'ble Apex Court has admitted a SLP, directing the appellant to pay tax as if the provision was on the statute. The ld. AR would emphasize on the words 'interim orders', stated by the Hon'ble jurisdictional High Court in Universal Medicare Pvt. Ltd. (supra) in relation to the said SLP. Surely, a stay is an interim order, meant to regulate the affairs during the pendency of the appeal before an appellate court. After the decision by the apex court, the same shall in any case obtain. There is as such little merit in the contention of the ld. AR to restore the matter back to the file of the A.O. to decide in accordance with the final decision by the Hon'ble Apex Court, an aspect also considered by the tribunal in Prembril Engineering P. Ltd. (supra). We, accordingly, find little merit in the assessee's case. We may though clarify that the Revenue relying on the admission of the appeal by it before the Apex Court in Exide Industries Ltd. (supra), it shall give effect to the decision by the hon'ble court on the merits of the case, modifying the instant assessment accordingly, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The refund of interest u/ss. 234A and 234B, in-as-much as the same forms part of the demand raised, is exigible for interest u/s.244A on its withdrawal or, as the case may be, reduction and, consequently, refunded with interest. There is further nothing to suggest of any withdrawal of interest u/s. 244A, neutralizing the interest received to that extent. That apart, the payment of tax and, accordingly, liability toward the same is, as stated by the Revenue, not a business expenditure or a liability of the business, entitling deduction of expenditure, as well as of interest thereon, where discharged belatedly, being compensatory in character. Once income-tax is not deductible, any sum paid toward its delayed discharge cannot, consequently, be considered as business expenditure, howsoever financed. The matter is not res interga and stands clarified by the apex court, as in the case of Bharat Commerce & Industries Ltd. v. Union of India [1998] 230 ITR 733 (SC) and East India Pharmaceutical Works vs. CIT [1997] 224 ITR 627 (SC). This would apply equally to the interest suffered on penalty as well. The interest receivable from the Revenue, on the other hand, is on the amount paid by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , i.e., in view of the decisions by the co-ordinate benches of this tribunal. We are, in view of the matter being not of wide import, disinclined to do so, and shall accordingly adopt the said decisions by the tribunal. Our opinion in the matter, stated here-in-before, is only for the consideration by the Hon'ble jurisdictional High Court, if and where deemed fit in a particular case - the larger principle involved being: Would the conditions of taxability and deductibility in relation to a particular sum (interest in the present case) obtain even where it becomes both - due from as well as due to, the same party, with we having expressed our clear view that the conditions of taxability and deductibility, being regulated by law - based on the nature of the payments, are paramount, and the identity of the person, whether same or different, is of little consequence in law. So, however, and even as observed during hearing, the set-off of interest shall be subject to and regulated by two (factual) conditions incident thereon. The set-off is premised on a nexus inasmuch as the amount is deemed to and receivable from the same party, i.e., the Income-tax Department. Implicit therein ..... 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