1989 (5) TMI 29

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..... 1, 1977), amongst others, the assessee claimed a sum of Rs. 28,308 as interest paid for delayed payment of income-tax due as deduction. The Income-tax Officer rejected the claim. He held that the said interest is not an expenditure laid out wholly and exclusively for the purpose of the business. It was confirmed, in appeal, by the Commissioner of Income-tax (Appeals). In second appeal, the Appellate Tribunal held that the payment of interest by the assessee was not made in the character of a trader. The interest was paid only as an assessee and nothing more. The plea for deduction was negatived. Thereafter, at the instance of the assessee, the Income-tax Appellate Tribunal has referred the question of law formulated herein above for the dec .....

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..... income-tax levied on the assessee is not a permissible deduction, the interest payable for non-payment of such tax would also assume the same role or character. It will have the same colour and content of the original amount which is liable to be paid as income-tax. In this view of the matter, we are of the view that interest levied or paid due to delay in payment of income-tax can never be a permissible deduction under section 37(1) of the Income-tax Act. We are concerned with the assessment year 1978-79. Counsel for the assessee laid stress on section 80V of the Income-tax Act which was inserted by the Taxation Laws (Amendment) Act, 1975, and which was in force till the passing of the Finance Act, 1985. As per section 80V of the Income- .....

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..... [1983] 144 ITR 936, the Calcutta High Court in National Engineering Industries Ltd. v. CIT [1978] 113 ITR 252 and the Punjab and Haryana High Court in CIT v. Oriental Carpet Manufacturers (India) P. Ltd. [1973] 90 ITR 373. We concur with the aforesaid decisions. In the above view of the matter, we hold that the Appellate Tribunal was justified in holding that the interest paid, on delayed payment of income-tax was not an item of expenditure allowable under section 37(1) of the Income-tax Act. We answer the question referred to us in the affirmative, against the assessee and in favour of the Revenue. A copy of this judgment, under the seal of this court and the signature of the Registrar, shall be forwarded to the Income-tax Appellate .....

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