TMI Blog2024 (4) TMI 1069X X X X Extracts X X X X X X X X Extracts X X X X ..... ance that the disallowance is carried out u/s 143(1)(a) through prima-facie adjustment makes no difference. The principle that the item falling u/c (a) of section 43B of the Act is entitled for deduction on actual payment basis is settled by the catena of judicial precedents, therefore the disallowance thereof carried out u/s 143(1)(a) of the Act in view of Rohan Korgaonkar [ 2024 (2) TMI 1373 - BOMBAY HIGH COURT] cannot be faulted with. In view thereof we find no infirmity with the orders of tax authorities in carrying out the disallowance through prima-facie adjustment u/c (iv) of u/s 143(1)(a) of the Act. The ground therefore stands dismissed. Whether interest on sales-tax/MVAT is deductible as an expenditure only upon actual payment? - According to section 30(3) of MVAT Act, if any tax remains unpaid up to one month after the end of the period of assessment, then the dealer is liable to pay simple interest at the rates as specified from time to time, on such tax for each month or part thereof from the date immediately following the last date of the period for which the dealer has been assessed till the date of the order of assessment. Thus s/s 30 of MVAT Act the assessee dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned order confirming the disallowance of interest payable on MVAT statutory liability u/s 43B (a) of the Act and direct the Ld. AO to delete the impugned disallowance being contra-legem. The ground number 2 stands accordingly allowed. Levy of interest u/s 234A, 234B 234C is mandatory and not at the discretionary of tax authorities - See Anjum H Ghaswala [ 2001 (10) TMI 4 - SUPREME COURT] Appeal of assessee is partly allowed. - Hon ble Shri S. S. Godara, Judicial Member And Shri G. D. Padmahshali, Accountant Member For the Assessee : Mr Rajesh Loya [ Ld. AR ] For the Revenue : Mr Abhay Marathe [ Ld. DR ] ORDER PER G. D. PADMAHSHALI, AM; The DIN order No. ITBA/NFAC/S/250/2022-23/1045760461(1) dt. 21/09/2022 passed u/s 250 of the Income-tax Act, 1961 [ the Act hereinafter] by the National Faceless Appellate Centre [ NFAC hereinafter] for assessment year 2019-20 [ AY hereinafter] is challenged by the assessee in the present appeal. 2. Briefly stated facts of the case are that; 2.1 The assessee company engaged in manufacturing and trading of country liquor. The return of income filed by it declaring total income of ₹ 32,03,310/- was processed summarily u/s 143(1) of the Act by d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director of Income Tax CPC Bangalore passed u/s 143(1) is bad in law and wrong on facts. The learned CIT(A) erred in sustaining the same and in disregarding the fact that the intimation passed u/s 143(1) is illegal and issue involved is debatable one. (2) That the learned AO erred in law and on facts in making addition of Rs. 3,62,005/- u/s. 43B on account of Interest payable on VAT and the learned CIT(A) erred in confirming the action of the AO. On facts and circumstances of the case, interest on VAT does not come under the purview of section 43B. The learned AO as well as learned CIT(A) erred in not properly appreciating the legal position according to the several decisions of various Courts and making addition without considering the explanation given and case laws relied upon. (3) That the learned AO erred in law and on facts in charging interest u/s 234A, 234B and 234C and the learned CIT(A) erred in confirming the action of the AO. On the facts and circumstances of the case, interest charged is improper and unjustified. (4) That for any other ground with kind permission of your honour at the time of hearing of appeal. 3. During the course of virtual hearing, the Ld. AR reiter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses u/s 43B of the Act is concerned we are mindful to the ratio laid down by Jurisdictional Bombay High Court in Khatau Junkar Ltd. Vs DCIT [1992, 196 ITR 55 (Bom)], wherein their Hon'ble Lordships have that, the prima facie adjustment u/s 143(1) is permissible where on the face of the return and the documents/accounts accompanying it, the deduction claimed is found inadmissible. In the present case, from clause 26(i)(B)(b) of the TAR it was on face of the record before the Ld. AO/CPC that the appellant while computing its taxable income did fail to disallow the interest payable which remained unpaid by the expiry of time limit prescribed u/s 139(1) of the Act. Thus, impugned disallowance u/s 43B(a) of the Act carried out on the basis of return and accompany TAR finds support in Khatau Junkar (supra) which the appellant also relied in its written submission. Going a step further in Rohan Korgaonkar Vs DCIT [2024, 159 taxmann.com 321] their Hon ble lordships have recently held that, once the principle involved in matter of disallowance is settled by binding judicial precedents, the circumstance that the disallowance is carried out u/s 143(1)(a) through prima-facie adjustment ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dful to divergent view taken by the Hon ble Calcutta High Court in the year 1995 in case of Hindustan Motors Limited Vs CIT reported in 218 ITR 450 (Cal) wherein it was held that interest paid on duties are not part and parcel of duty payable, therefore such interest cannot be subjected to disallowance u/s 43B of the Act. Subsequently in the year 2001 their Hon ble lordships while dealing with the matter of interest on municipal taxes reiterated the former ratio in CIT Vs Orient Beverage Ltd [2001, 117 Taxman 106 (Cal)] CIT Vs E.L. Properties Pvt. Ltd. [2001, 248 ITR 14 (Cal)] where by it is held that interest payable could not be treated as an adjunct or part of Municipal taxes and, therefore, section 43B could not be invoked for disallowing outstanding interest . Similar proposition can also be traced in the decision of Shankar Trading Company Pvt. Ltd. Vs CIT [2012, 342 ITR 81 (Del)]. 11. While adjudicating this issue of disallowance of interest on taxes/duties in favour of assessee, the Hon ble courts have considered law settled by the Hon ble Apex Court that, the interest payable on taxes/duties are not penalties but compensatory in nature for delayed payment/discharge of tax/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbiguous, then it is to be given natural meaning, irrespective of its consequences. In view thereof, the Revenue s proposition to read clause (a) of section 43B of the Act the terms taxes/duties so as to include therein the term interest therein would be ferocious and therefore impermissible in view of the decision of the Hon ble Apex Court in Britania Industries Ltd. Vs CIT [2005, 278 ITR 546 (SC)] wherein the matter of interpretation of fiscal laws, their Hon ble Lordships have categorically led that, when the language of a statute is clear and unambiguous, the courts are to interpret the same in its literal sense and not to give a meaning which would cause violence to the provisions of the statute. 14. Before coming to conclude the subject matter of disallowance, we note that, the Hon ble Apex Court in Mahalakshmi Sugar Mills (supra) settled the issue of deductibility of interest on taxes/duties holding that, interest payable on unpaid or delayed liability is part and parcel of such liability and was in the nature of compensation to the government. The said decision rendered in context of deductibility cannot robotically be pressed for the purpose of provisions of section 43B(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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