1988 (2) TMI 111

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..... ails of this amount as per the order of the CIT(A) are as under: (i) Rs. 3,835 Addl. sales-tax liability; (ii) Rs. 14,018 amount charged under s. 36(3) of Bombay Sales-tax Act. (iii) Rs. 3,689 Forfeited by the Govt. for excess collection. Rs. 21,542 2. According to the ITO, the entire amount of Rs. 21,542 was .....

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..... re us. 3. The learned Counsel for the assessee has contended that the demand of Rs. 3,835 was created by the Sales-tax Department during the accounting period relevant to the assessment year under appeal and, therefore, the liability is admissible as a deduction for the assessment year under appeal. It was also stated that for certain sales the assessee claimed as holder of declaration in F16 b .....

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..... n of the same when determined by the STO. The order of the CIT(A) on this account is, therefore, reversed. The assessee will be entitled to deduction of Rs. 3,835. 4. The second amount of Rs. 14,018 is on account of penalty under s. 36(3) of the Bombay Sales-tax Act for delayed payment of sales tax. The learned Counsel for the assessee relied on a judgment of the Special Bench of the Tribunal i .....

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..... also relied on the judgment reported in (1985) Taxation 77(1) r. 14. We have heard the learned DR also. 5. After considering the rival submissions we are included to agree with the judgment of Special Bench of the Tribunal. Since the penalty is in the nature of interest on loss of Government funds, in our opinion, the amount is allowable as deduction while computing the total income of the asse .....

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..... s not claimed for the asst. yr. 1972-73 but was paid to the Sales-tax Department and the same amount has been forfeited during the financial year 1976-77, then the assessee will be entitled to deduction for forfeited amount. In such circumstances, we set aside the order of the CIT(A) on this account and restore this issue to the file of the ITO for fresh determination in the light of the above obs .....

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