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TMI Blog2015 (4) TMI 1293X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to tax - in the case of the Assessee simply because the exercise carried out by it does not result in loss of revenue and there could not be any prohibition for the same, allowed it - assessee claimed that this was business expenditure and this should have been allowed - the Tribunal in permitting this exercise not violated any of the provisions of the Income Tax Act, 1961 - the Tribunal has followed the similar exercise in the case of very Assessee on the prior occasion as well thus, as such no substantial question of law. - Decided in favour of the assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... presenting interest received on refund of taxes u/s 244A of the Income Tax Act, 1961 in taxable income as against an amount of ₹ 1,00,25,557/- offered by the assessee which was after netting of the interest paid to the Department u/S 220(2) and 234B of the Act of ₹ 27,87,771/-. 4. In this context, brief facts are that the asessee received interest on refund of taxes paid amounting to ₹ 1,28,13,328/-. The assessee also paid interest on taxes payable in terms of sections 220(2) and 234B of the Act amounting to ₹ 27,87,771/-. The assessee set-off the interest paid against the interest received and offered to tax only net interest income of ₹ 1,00,25,557/-. The A.O. disagreed with the assessee and denied the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n upheld. 6. On the contrary, the ld. D.R. has relied upon the orders of authorities below and submitted that interest paid by the assessee under Sections 220(2) and 234B of the Act are in the nature of 'income tax' and as per the provisions of the Act, 'income tax' is not an allowable deduction and therefore the assessee's claim for set-off of interest paid under Sections 220 (2) and 234B against interest income on refund of taxes u/s 244A was rightly denied. 7. Having considered the rival submissions as well as precedents cited by before us, we note that identical controversy came up before the Hon'ble Bombay High Court in the case of Bank of America NT & SA (supra), came up wherein the following discussion has been made:- "3. Even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessee should have been allowed to be set off against the interest deposited with the Department and taxed in the hands of the Assessee. The argument was that the interest paid to and received from is the same party i.e Government of India and therefore, both transactions should be taken together. 5. We do not find that the Tribunal has, in permitting this exercise, in any way violated any of the provisions of the Income Tax Act, 1961. It was a peculiar situation between the Assessee and the Department. The Tribunal has followed the similar exercise in the case of very assessee on the prior occasion as well. In such circumstances we are of the opinion that the second question also does not raise any substantial question of law. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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