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2016 (5) TMI 1507 - ITAT MUMBAIDeclaration u/s 158A(1) - confirming rental income from M/s. Choradia Fashions Pvt. Ltd., in respect of Shiv Sagar Estate particularly when that income was taxed in the hands of Shri J M Shah as the property was already transferred by the assessee to him on 1st Jan. 2005 in pursuance of permission of the appropriate authority under section 269UL(3) of the Act dated 4th March 1995 - Identical question of law is pending before the Hon’ble High Court - HELD THAT:- In view of the admission of substantial question of law on the issue in hand, by the Hon’ble High Court we allow the declaration of the assessee filed u/s. 158A(1) and direct that whatever will be the decision from the Hon’ble Jurisdictional High Court will be binding upon the respective parties. However, since the issue has been decided against the assessee, for the time being (till the outcome from the Hon’ble High Court) the issue is decided against the assessee. Disallowance of interest on customs duty - whether the interest on delayed payment is allowable expenditure or not? - HELD THAT:- On the issue of interest for delayed payments reference may be made to Triveni Engineering Works Ltd. vs. CIT [1983 (10) TMI 49 - ALLAHABAD HIGH COURT] ; CIT vs. Laxmidevi Sugar Mills Pvt. Ltd. [1999 (3) TMI 41 - ALLAHABAD HIGH COURT] ; Raj Narayan Agarwal vs. CIT [2002 (8) TMI 59 - DELHI HIGH COURT] ; CIT vs. Delhi Automobiles [2004 (5) TMI 16 - DELHI HIGH COURT] wherein interest paid on delay in paying sales tax was held to be deductible. Admittedly, there are contrary decisions also wherein it was held that interest on delayed payments is not an allowable deduction. There are contrary decisions also wherein it was held that interest on delayed payments is not an allowable deduction. If this issue is analyzed with respect to section 43B of the Act, the scope and effect of the amendment made in the first proviso to section 43B, by the Finance (No.2) Act 1998, have been elaborated in departmental Circular No. 772 dated 23rd December 1998, wherein certain expenses were held to be allowable only on actual payment. There is no dispute, in the present appeal that interest was paid by the assessee. It is different matter that the assessee carried the matter in appeal before the Hon’ble High Court or before the Hon’ble Apex Court and contested a legal battle, though failed, but fact remains that the customs duty as well as interest on delayed payments was made by the assessee. Demand was raised by the department on 18.09.2006 therefore liability arose in the present assessment year. Thus, the deduction has to be allowed either u/s. 37 or u/s. 43B of the Act. Therefore, this ground of the assessee is allowed.
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