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TMI Blog1992 (11) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... layed payment under the Assam Finance (Sales Tax) Act and of Rs. 2,319 for delayed payment of instalments to the Divisional Forest Officer is not penal in nature?" The respondent is absent. We have heard Shri D. K. Talukdar, learned counsel for the Revenue. The assessee is a private limited company. The dispute relates to the assessment year 1977-78. During the previous year corresponding to the assessment year 1977-78, the assessee paid interest on sales tax dues to the State Government under the provisions of the Assam Finance (Sales Tax ) Act, 1956, as also interest for delayed payment of forest kist amount due to the Government for some prior years. The assessee claimed deduction of the amount paid as such interest. The Income-tax O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be claimed as deduction under section 10(2)(xv) of the Indian Income-tax Act, 1922, corresponding to section 37 of the 1961 Act. Following this decision, this court has held in CIT v. Pheros and Co. (P.) Ltd. [1989] 178 ITR 472 ; 1 GLR 165, that interest paid under section 35A of the Assam Sales Tax Act, 1947, is deductible under section 57 of the Act. The Supreme Court in Mahalakshmi Sugar Mills Co.'s case [1980] 123 ITR 429 considered the provisions of the U. P. Sugarcane Cess Act, 1956. Section 3 is the charging section. Sub-section (2) requires the owner of the factory to pay cess on such date and at such place as may be prescribed. Sub-section (3) states that any arrears of cess not paid on the date prescribed under sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in the discretion of the collecting officer or authority ... The words used in section 3(6) are 'specifying the amount of arrears including interest', that is to say that the interest is part of the arrear of cess . . . In truth, the interest provided for under section 3(3) is in the nature of compensation paid to the Government for delay in the payment of cess. It is not by way of penalty ...." The Supreme Court held in paragraph 12 (at page 435): " In our opinion, the interest paid under section 3(3) of the Cess Act cannot be described as a penalty paid for an infringement of the law. As that is the only ground on which the Revenue resists the claim of the assessee to a deduction of the interest under section 10(2)(xv) of the India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per annum shall be payable from the day commencing after the period of sixty days. The mode of recovery is dealt with in section 23. The dealer shall be deemed to be in default if the demand in respect of any dues under the Act is not paid on or before the date specified. The date for payment can be extended by the Commissioner. Sub-section (2) states that where dealer is in default, the Commissioner may, in his discretion, direct that in addition to the amount due, a sum not exceeding that amount shall be recovered from the defaulter by way of penalty. The Commissioner may order that the amount due from the defaulter shall be recoverable as an arrear of land revenue. The relevant provisions of the Assam Finance (Sales Tax) Act, 1956, al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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