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TMI Blog1981 (11) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... able expenditure. 2. For the assessment year 1978-79, the assessee-company did not pay the sales tax due from it to the sales tax department within the statutory period. The sales tax department, therefore, charged interest amounting to Rs. 8,500 from the assessee. The ITO disallowed the claim of the assessee for allowing Rs. 8,500 as business expenditure under section 36(1)(iii) or section 37 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sugar Mills Co. v. CIT [1980] 123 ITR 429 (SC). I am, therefore, of the opinion that the interest paid by the assessee was incidental to the carrying on of its business and the expenditure was incurred on the ground of commercial expediency. The same is, therefore, allowable as revenue expenditure under section 37 of the Act. 4. In support of his case, the learned representative of the departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re. To the same effect is the view taken by the Income-tax Appellate Tribunal in Tahira Industries (I) (P.) Ltd. v. ITO [IT Appeal Nos. 2573 and 2574 (Bom.) of 1968-69] and Mrs. ABC v. ITO [IT Appeal No. 155 (Bom.) of 1975-76]. I may also refer to the following para of the order of the Tribunal in IT Appeal Nos. 3634, 3635, 3637 and 3638 (Bom.) of 1977-78, which shows that the levy of interest for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State is kept out of the money to which it is entitled. If this is the understanding, it is clear that the amounts are not levied for any infraction or violation of law and hence, it is deductible as arising in the course of or incidental to carrying on of business and/or was incurred on the grounds of commercial expediency." 5. In view of the above decision of the Income-tax Appellate Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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