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TMI Blog1992 (1) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 (hereinafter referred to as "the Act"), the Income-tax Appellate Tribunal (Jabalpur Bench), Jabalpur, has referred the following question for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that an amount of Rs. 30,246, being interest paid on arrears of sales tax, was an allowable deduction for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of interest, the demand notice for payment of tax was received in the year 1974 and the liability would be for the calendar year 1974. The Tribunal, in further appeal, upheld the decision of the Appellate Assistant Commissioner on both the counts. In the view of the Tribunal, the interest was paid not as penalty but as an accretion to sales tax. The aforesaid question has been referred to thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee shall be allowed deduction of the amount so spent in computing his income chargeable as profits and gains of business or profession. Section 22(4A) of the Madhya Pradesh General Sales Tax Act, 1958, authorises the Commissioner of Sales Tax to permit the assessee to pay the tax demanded in instalments subject to such conditions as may be imposed. It further provides that if such instalmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, be held as an allowable expenditure. The view that we have taken finds support from the decision of the Supreme Court in Mahalakshmi Sugar Mills Co. v. CIT [1980] 123 ITR 429. There the court was concerned with the interest payable on arrears of entry tax on entry of sugarcane into a factory for use, consumption or sale. The interest payable on arrears of cess was held as allowable business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Mills Co.'s case [1980] 123 ITR 429, fully supports our view. For the reasons stated above, we answer the question referred to us in favour of the assessee and against the Department and hold that the Tribunal was justified in holding that the amount of Rs. 30,246, being interest paid on arrears of sales tax, was an allowable deduction for the assessment year 1975-76 when the liability to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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