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TMI Blog2025 (3) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in not allowing the interest tax paid inspite of the specific provisions of Section 18 of the Interest-tax Act. 3. The NFAC should have appreciated that under section 43-B all taxes which are otherwise allowable under the act is to be allowed only on the year in which it is actually paid and CIT(A) has also erred in not allowing the claim of Rs. 69,699/-. 4. The NFAC should have appreciated that the interest tax payable by virtue of section 18 of the interest Tax Act becomes allowable as a deduction under the Income Tax Act, which the CIT(A) has also not properly appreciated the issue. 5. The NFAC should have appreciated that under section 43 B deduction otherwise allowable under the Act of any sum payable as Tax, irrespective of the previous year in which the liability to pay such sum was incurred by the Assessee shall be allowed in computing the income referred to in section 28 of that previous year which such sum is actually paid.to be allowed only in the year in which it is actually paid. 6. The NFAC having accepted that ought to have appreciated that in view of the clear provisions of the Section 43B, interest tax liability is allowable only in the year in which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Income-tax Act. "Notwithstanding anything contained in the Income- tax Act, in computing the income of a credit institution chargeable to income- tax under the head" Profits and gains of business or profession" or under the head" Income from other sources", the interest- tax payable by the credit institution for any assessment year shall be deductible from the income, under the respective heads, of the credit institution assessable for that assessment year]" (ii) On perusal of the submissions of assessee, it is observed that the assessee claimed deduction of interest tax demand which arose after giving effect to High Court Order for the assessment years 1993-94 to 1997-98 that is evident from the rectification order u/s 154 of Income Tax Act, 1961 dated 20.12.2017. (iii) The interest Tax Act, 1974, although obsolete now, is applicable for to the whole of India, including all the States and Union Territories with no exceptions with regard to chargeable interest accruing before 31 March 2000 Further, as per provisions of section 18 of Interest Tax Act which were quoted by the assessee, it is clearly evident that the interest tax payable by the credit institution for any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there is no dispute about the fact that the liability to pay the impugned interest tax arose and was actually paid by the appellant in the FY 2017-18 (AY 2018-19). There is also no dispute about its eligibility of deduction from income. The only issue is whether it was allowable in the years it pertained to (.e. AY 1993-94 to 1997-98) or is it allowable in the year when actual liability arose and was also paid by virtue of order of the AO giving effect to order of Hon'ble High Court. It is also pertinent to mention here that the appellant has not provided details of the time-line and evidences of the liability to pay such interest tax so that it is not verifiable if the appellant had claimed it in any of the relevant assessment years when the issue first arose during the assessment of interest tax or in first appeal. It is not clear what had happened about such liability at the time of orders giving effect to order of first appellate authority in interest tax appeal and whether the appellant had claimed corresponding deduction from its' income in any of the earlier years. It is also noted here that the section 43B of Income Tax does not mention about deduction of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, order giving effect pursuant to this Tribunal's order have been passed for the A.Ys 1993-94 to 1997-98 (P.B Page Nos.12 to 15) and raised the demand for the respective A.Ys. accordingly. 12. The issue of levy of interest-tax on the assessee was challenged by the Revenue before the Hon'ble High Court of Madras in TC(A) Nos.1401 to 1405 of 2007 dated 27.08.2014 (Mad.) (P.B Page Nos.1 to 9) against the orders of this Tribunal was held in favour of the Revenue, since the assessee is also engaged in the business of financial company, their lordship held as under: "13. The learned counsel for the assessee relied upon a decision of the Supreme Court in Commissioner of Wealth-tax v. Ellis Bridge Gymkhana and Others, [1998] 229 ITR 1, wherein it is held that the rule of construction of a charging section s that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section and no one can be taxed by implication. There is no dispute with regard to the said legal proposition. In the case on hand, the nature of business conducted by the assessee and the transaction of finance, for which interest has been recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards interest tax which was relating to A.Ys 1993-94 to 1997-98 consequent to the order of the A.O dated 20.12.2017 (OGE to the order of the Hon'ble High Court of Madras). The expenditure of interest-tax claimed has been disallowed by the A.O and that of Ld. CIT(A) stating that 'Section 18 of the Interest-tax Act allows the interest tax payable by the assessee is allowable deduction from income assessable for the respective A.Ys and not in the year in which the interest-tax payment was made'. 17. We note that heading of Section 18 of Interest-tax Act states that interest tax deductable in computing total income under the Income tax Act and reads as under: "18. Interest-tax deductible in computing total income under the Income-tax Act.-Notwithstanding anything contained in the Income-tax Act, in computing the income of a credit institution chargeable to income-tax under the head "profits and gains of business or profession" or under the head "income from other sources", the interest-tax payable by the credit institution for any assessment year shall be deductible from the income, under the respective heads, of the credit institution assessable for that assessment year." 18. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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