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TMI Blog2016 (5) TMI 1507X X X X Extracts X X X X X X X X Extracts X X X X ..... ver will be the decision from the Hon ble Jurisdictional High Court will be binding upon the respective parties. However, since the issue has been decided against the assessee, for the time being (till the outcome from the Hon ble High Court) the issue is decided against the assessee. Disallowance of interest on customs duty - whether the interest on delayed payment is allowable expenditure or not? - HELD THAT:- On the issue of interest for delayed payments reference may be made to Triveni Engineering Works Ltd. vs. CIT [ 1983 (10) TMI 49 - ALLAHABAD HIGH COURT] ; CIT vs. Laxmidevi Sugar Mills Pvt. Ltd. [ 1999 (3) TMI 41 - ALLAHABAD HIGH COURT] ; Raj Narayan Agarwal vs. CIT [ 2002 (8) TMI 59 - DELHI HIGH COURT] ; CIT vs. Delhi Autom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri H. N. Motiwalla For The Revenue : Shri Rajguru-DR ORDER Per Joginder Singh (Judicial Member) Both appeals are by the assessee against the impugned order both dated 23/05/2012 for A.Y. 2007-08 and 2008-09 of the First Appellate Authority, Mumbai. 2 First we shall take up the appeal in ITA No. 4874/Mum/2012 for A.Y. 2007-08, wherein first ground raised by the assessee pertains to confirming rental income of ₹ 30,29,390/- from M/s. Choradia Fashions Pvt. Ltd., in respect of Shiv Sagar Estate particularly when that income was taxed in the hands of Shri J M Shah as the property was already transferred by the assessee to him on 1st Jan. 2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. More specifically when the Assessing Officer admitted that payment of interest on custom duty was for delayed payment of custom duty therefore, the same forms part and parcel of liability of customs duty. The learned counsel for the assessee advanced identical arguments by placing reliance upon the decision from Hon ble Apex court in Mahalaxmi Sugar Mills Co. vs. CIT (123 ITR 429) (SC). It was also pleaded that the decision from Hon ble Calcutta High Court in Hindustan Motors Ltd. vs. CIT (1996)(218 ITR 450) (Cal) is not applicable being on different facts by explaining that liability crystallized in A Y 2007-08 and demand was raised on 18.09.2006. Our attention was invited to a certificate from Canara Bank dated 20.09.1997 by claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms Act 1962. The assessee disputed the levy of interest before the Hon ble High Court. It is noted that the assessee challenged the interest payment before various authorities and ultimately against the interest demand a Writ Petition was filed before the Hon ble Bombay High Court (WP No. 338/2006) order dated 28th March 2006 (pages 9 to 23 of the Paper-book). The stand of the Revenue is that the levy of interest is applicable from the date when the Hon ble Apex Court confirmed the liability of customs duty and penalty. The issue before us whether the interest on delayed payment is allowable expenditure or not. There is no dispute to the fact that the assessee made the payment of the interest also. In such a situation, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratio laid down in CIT vs. J K Synthetics Ltd. (2009) 309 ITR 371 (Del) further supports the case of the assessee. 8. If this issue is analyzed with respect to section 43B of the Act, the scope and effect of the amendment made in the first proviso to section 43B, by the Finance (No.2) Act 1998, have been elaborated in departmental Circular No. 772 dated 23rd December 1998, wherein certain expenses were held to be allowable only on actual payment. There is no dispute, in the present appeal that interest was paid by the assessee. It is different matter that the assessee carried the matter in appeal before the Hon ble High Court or before the Hon ble Apex Court and contested a legal battle, though failed, but fact remains that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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