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TMI Blog2014 (6) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... to a Government is not hit by section 43B of the Act. Thus, the observation of the Commissioner of Income Tax (Appeals) that these interest payments made to Government of Tamil Nadu are hit by the provisions of section 43B of the Act is not correct and reversed. However, we agree with the view of the Commissioner of Income Tax (Appeals) that prior period interest liability crystallized on 28.3.2008 when the payment was made to the Government of Tamil Nadu during the financial year 2007-08 relevant to the assessment year 2008- 09 and is allowable in the assessment year 2008-09. Addition u/s 43B of the Act being interest paid to Government of Tamil Nadu - AO observing that the said amount was only a provision for payment and as per the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) has sustained the order passed by the Assessing Officer erred in disallowing of ₹ 5,09,22,000/- u/s.43B being interest paid to Government of Tamil Nadu. 2. The appellant company submits that disallowance u/s.43B is not applicable to it as it is a Govt. company. 3. The Commissioner of Income Tax (Appeals) has sustained the order passed by the Assessing Officer erred in disallowing of ₹ 2,08,64,000/- u/s.43B being interest paid to Government of Tamil Nadu. 4. The appellant company submits that disallowance u/s.43B is not applicable to it as it is a Government company. 5. The appellant company submits that the amount shown as loss of revaluation of ₹ 2,08,000/- is actually depreciation on loose tools li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment year 2007-08 where the assessee made a claim. The Commissioner of Income Tax (Appeals) further observed that prior period interest expenses of ₹ 509.22 lakhs are payable to public financial institutions/ Governmental bodies and hence allowability of interest payments are governed by the provisions of section 43B of the Act. 6. Counsel for the assessee submits that entire prior period interest of ₹ 509.22 lakhs was paid to Government of Tamil Nadu and such payment is not governed by the provisions of section 43B of the Act as it was not paid to any public financial institution or governmental bodies. Counsel for the assessee placing reliance on the decision of the coordinate Bench of this Tribunal in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 43B are applicable or not? 9. Heard both sides. Perused orders of lower authorities. The Assessing Officer while completing the assessment disallowed ₹ 509.22 lakhs out of prior period expenses of ₹ 1529.39 lakhs debited by the assessee during this assessment year. The Commissioner of Income Tax (Appeals) observed that interest expenses brought forward from earlier years ( period prior to 1.4.2006) and debited in the profit and loss account during the financial year 2006-07 are ₹ 1054.38 lakhs. The Government of Tamil Nadu waived ₹ 552.78 lakhs pertaining to the period upto 2003-04 leaving balance of ₹ 509.22 lakhs to be paid by the assessee. This balance interest of ₹ 509.22 lakhs represents i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e observations of the Commissioner of Income Tax (Appeals) that these payments are governed by the provisions of section 43B of the Act are concerned, we are not in agreement with the Commissioner of Income Tax (Appeals) as prior period interest was paid by the assessee to the Government of Tamil Nadu and Government of Tamil Nadu is not a public financial institution / governmental body which comes under the provisions of section 43B of the Act. The co-ordinate Bench of this Tribunal in the case of The Kallakurichi Co-op. Sugar Mills Ltd. (supra) observed that any amount payable to a Government is not hit by section 43B of the Act. Thus, the observation of the Commissioner of Income Tax (Appeals) that these interest payments made to Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s directed the Assessing Officer to examine whether the said amount is already paid by the assessee to TUFIDCO and if it is paid before the due date for filing of return of income to allow the said interest as expenditure in respect of the balance of ₹ 183.90 lakhs. 12. Counsel for the assessee submits that Commissioner of Income Tax (Appeals) disallowed the said amount stating that provisions of section 43B of the Act are attracted and since the assessee has not paid the said amount before the due date for filing of return, the same is to be disallowed. Counsel submits that ₹ 183.90 lakhs was paid to the Government of Tamil Nadu. Since the interest was paid to Government of Tamil Nadu, provisions of section 43B were not attr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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