TMI Blog2014 (3) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequence of default committed by the assessee in discharging its statutory obligation. The interest under sections 215 or 217 has a direct connection with the amount payable as advance tax by charging interest on which the corpus of the tax amount is enlarged - Section 139 (8) or section 215/217 is to be regarded as part and parcel of the liability to pay tax – thus, the same is deductible along with income tax liability while computing the chargeable profits of the company in accordance with the relevant provisions of Companies (Profits) Surtax Act, 1964 – thus, there is no reason to interfere in the findings of the Tribunal – Decided against Revenue. - Income Tax Reference No. - 222 of 1992 - - - Dated:- 11-3-2014 - Hon'ble A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, was deductible along with the income tax while computing the chargeable profit as per Rule 2(1) of the First Schedule to the Companies (Profits) Surtax Act, 1964. Still not being satisfied the Department has moved the present References. With this back ground, Sri R.K. Upadhyay, the learned counsel for the Department has justified the order passed by the A.O. He submits that as per the ratio laid down in the case of Shree Pipes Vs. Deputy Commissioner of Income Tax (2007) 289 ITR 154 (Raj.), the interest accrued on delayed payment of tax which is otherwise allowable as deduction under the provisions of the Income Tax Act while computing the total income is part of tax within the meaning of section 43B. The liability to intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d order passed by the Appellate Authorities. He relied on the ratio in the case of M/s Bharat Commerce Industries Ltd. Vs. C.I.T., New Delhi, 153 ITR 275 Delhi, where it was held that interest paid due to delay in payment of tax would also be part and parcel of the liability to pay income tax. Since income tax paid by an assessee is not a permissible deduction, the interest paid for delay in payment of tax would also not be permissible deduction under S.37. The interest would take the colour of the original amount liable to be paid as income tax. He submits that the above ratio has been up-held by the Hon'ble Supreme Court vide its order dated 5th March 1998 (230 ITR, 733 SC). It is also a submission of learned counsel for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lastly, he made a request to up-hold the order passed by the Tribunal. We have heard both the parties at length and gone through the material on record. None of the case law cited by the parties is related the Companies (Profits) Surtax Act, 1964. However, in the instant case, it is evident that during the assessment years under consideration, the assessee has revised the chargeable profit deducting interest from the total income as per the letter dated 9.6.1987. The Rules for computing the chargeable profits are specifically mentioned in the First Schedule to the Companies (Profits) Surtax Act, 1964 (now repealed). Under Rule 2(i) of the First Schedule, tax and liability payable by the company is to be excluded while computing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties is related to Companies (Profits) Surtax Act, 1964. All the cases are related to either section 37 or section 40 of the Income Tax Act. The same are not applicable in the present case, which is the subject matter of the Companies (Profits) Surtax Act, 1964. The interest under sections 215 or 217 has a direct connection with the amount payable as advance tax by charging interest on which the corpus of the tax amount is enlarged. Section 139 (8) or section 215/217 is to be regarded as part and parcel of the liability to pay tax. Hence, the same is deductible along with income tax liability while computing the chargeable profits of the company in accordance with the relevant provisions of Companies (Profits) Surtax Act, 1964. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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